Works Policy 2008

WORKS POLICY

2008

Bharat Heavy Electricals Limited

16. ~.31'C1I1H ~ ~ ~K. RAVI KUMARChairman & ManagingDirector

1fffiJ ~ ~ ~Bharat Heavy Electricals Limited.

FOREWORD

BHEL is building capacity and capability to contribute fully for meeting the powerforecast for the 11th Plan and beyond. Capacity addition of 78577 MW and 82000 MWare envisaged during 11th & 12th Plan respectively in the country providing ampleopportunities to the company for a quantum jump in its operations.To meet thischallenge, the company has enhanced its manufacturing capacity to 10,000 MW perannum which is being further enhanced to 15,000 MW per annum in the next two yearsat a total investment of Rs.4200 crores.

BHEL aims to become a Rs.45,000 crores turnover Company by 2011-12 inline with our strategic Plan 2012 with a CAGR of 20% and to further grow to a level ofRS.91,900 crores by 2016-17. To achieve these ambitious goals, it is imperative that ourpolicies towards procurement/award of works etc., are in line with the changingenvironment and business needs. The main objective of any policy is to facilitateachieving organization goals and speedy implementation/execution of the projects.

A need was felt to revise the works policy which was last revised in Aug'03 toaddress the current business needs of the company. The revised policy, as approved bythe Board, is now being issued. I am sure that this revised policy will eliminate, to alarge extent, day to day problems and will enable speedy business decisions required fortimely execution of projects.

I compliment all officials involved in formulation of the revised works policy andalso to BHEL's Board for approving the same.

~'w>Y6th August 2008 (K. Ravi Kumar)

"~~~{~~ ~" RRt"tfiTt,~ ~ -110049 ~: (CfiT.)26001001,26001002,~ : 011-26492043, 26493659"BHELHOUSE",Siri Fort, New Delhi-110049 Tel. : (0) 26001001,26001002, Fax: 011-26492043,26493659

~.1ft.~~~q; (~~. ~'CfR -c;cifctcnT"fI)C.P. SINGHDirector (Engg., R & D)

1{ffif ~ ~ ~Bharat Heavy Electricals Limited.

PREFACE

For the company to grow and meet the aspirations of stakeholders, it

is necessary to keep pace with emerging business environment.

Customers are demanding shorter deliveries coupled with conditions

of high LD/penalties. This has put BHEL under tremendous pressure

to achieve the commitments made for timely completion of the

projects. Faster award of contracts is necessary for timely execution

of the projects. In this context, Works Policy plays an important role

in providing directions and guidelines to be followed on matters

relatingto works contracts.

A need was felt to revise the Works Policy to address the challenges

of compressed project cycles. Existing Policy has been thoroughly

reviewed and revised after detailed deliberations with all users.

Necessary changes have been made to clarify, simplify and

rationalize the existing provisions. Certain new provisions have

been added to facilitate working at sites. The DOP has also been

rationalized keeping in view present organizational needs.

The revised Works Policy, as approved by the Board of Directors, is

now being issued. I hope, the revised Works Policy will enable

speedy decision making and timely execution of projects in a fair

and transparent manner.

Date: 6thAugust, 2008

"'aft ~ -{ \f<15rnf", ftffi ~, ;r{ fu;ffi-110049 ~: (<tiT.)011-26001004, ~ : 011-26493310,i-~ : [email protected]"BHEL HOUSE",Siri "Fort, New Delhi-110049 Phone: (0) 011-26001004, Fax: 011-26493310. E-mail: [email protected]

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CONTROLLED I UNCONTROLLED COpy COpy NO: 0001

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REVISION NO.: 00 ISSUE DATE: 06-08-2008

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ISSUED TO CATEGORY: INDIVIDUAU DESIGNATED RECEIPENT Intranet

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1. This Policy is being issued to: Hosted on BHEL Corporate Office Intranet

2. Holder of the controlled copy will receive revisions or additions, as and when issued.Obsolete versions shall be removed by the holder of controlled copy.

3. When the designated recipient ceases to be in the designated office, he I she shall ensurethat the controlled copy is passed on to the incoming incumbent

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ISSUED BY:

DATE: 06-08-2008

lL:[r(V.K. Arya)

GENERALMANAGER(CORP.MM)(Signature with Seal)

L r ~~

~ ~ 3mf/V.K.ARYA~/General Manager

1l>'MtR (~.~.)/Corporalt 'MaterialsManagement'IRQ tcft ~cl~CII\"tf~/8harat HeavyElectricalslid.*-~.{.\f<1".mm. ftrft ~/BHEI. House.SiriFort

'It ~'110049/NewOelhi"'0049

. DocumentNo.: AA:MM:WP

WORKS POLICY Rev. No: 00 Date: 06-08-2008

WORKS POLICY

Document No.: AA:MM:WP Rev. No: 00 Date: 06-08-2008

CONTENTS CHAPTER-I: Page Clause No.

1.0 Preamble 2 2.0 Scope 2 3.0 Definitions 2 4.0 Classification of Works 4 5.0 Contracts for Works/ Services 5 6.0 Estimates 5 7.0 Commitment Register 5 8.0 Earnest Money Deposit & Security Deposit: 6 9.0 Approval, Registration, Delisting and Banning of Business Dealings 9 10.0 Guidelines for Award of Works through Tenders 10 11.0 Open Tender 11 12.0 Limited Tender 12 13.0 Single Tender 12 14.0 Small Value Works at Project Sites 13 15.0 Mode of Communication 13 16.0 Late Tenders 13 17.0 Offers by Telegram/ Telex/ Fax/ E-mail / Internet etc. 14 18.0 Opening of Tenders 14 19.0 Tender Committee 15 20.0 Role of Tender Committee 15 21.0 Negotiations 16 22.0 Pre-bid Tender 17 23.0 Repeat Orders 18 24.0 Rate Contracts 19 25.0 Splitting the Contracts 20 26.0 Sharing of Information 20 27.0 Financial Concurrence 20 28.0 Re-tendering 20 29.0 Compensation for Compression 21 30.0 Work Execution in Other Areas 21 31.0 Recovery Rates for Materials and Tools & Plants 22 (Not specified in the Contract) 32.0 Extra Works 22 33.0 Works through Personal Enquiry 22 34.0 Modification in Financial Limits 22 35.0 Govt. Guidelines/ Instructions 22 36.0 Miscellaneous 22 37.0 Interpretations / Clarifications 23

CHAPTER-II: Delegation of Powers 24 CHAPTER-III: Powers of Financial Concurrence 38

WORKS POLICY


CHAPTER-I

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WORKS POLICY


1.0 PREAMBLE:

A contract covered under Works Policy will be termed as “Contract for Works/ Services”. The rules and requirements applicable to contracts for Works and Services as provided under various Laws and Regulations, including provisions of Companies Act, 1956 as amended from time to time, Memorandum and Articles of Association of the Company, policies laid down by the Board of Directors and directives that may be issued by the Management from time to time, shall be observed for contracts for Works / Services.

2.0 SCOPE:

This Policy lays down the directions and guidelines to be followed by the Manufacturing Units/ Regions/ Other Divisions including Cost Centers, here in after termed as Unit, on matters relating to Capital Works, Revenue Works / Works Services and Customer Project Related Revenue Works /Works Services. Procurement of materials/ equipment and their related services/ BOP turnkey packages is covered by Purchase Policy.

3.0 DEFINITIONS: 3.1 Capital Works connote:

Works related to acquisition/ creation/ construction of immovable fixed assets and additions/ replacements thereto in respect of Factory/ Office Complex/ Township/ Residential and Customer Project Related Capital Works including Enabling works.

3.2 Revenue Works/Works Services Comprise of:

i) New/ replacement works (Revenue Chargeable Assets) ii) Emergency Works iii) Repairs/ Maintenance/ Modifications/ Reconditioning & Rebuilding of Fixed

Assets iv) Material Handling, Transport, Loading, Unloading, Stacking of Materials, Stores etc.

v) Revenue Works Services not covered by Purchase Policy including hiring/ leasing of assets and hiring of expert services, canteen, medical, security, sanitation, horticulture, job works etc.

vi) Insurance and work specific banking operations.

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3.3 Customer Project Related Revenue Works/ Works Services include: i) Civil & Land Development work

ii) Erection of Equipment iii) Commissioning of equipment iv) Material handling, transportation, loading, unloading and stacking of materials,

stores etc. v) Service after Sales and operations & maintenance etc. vi) Revenue Works Services including hiring/ leasing of assets and hiring of expert

services, canteen, medical, security, sanitation, horticulture, job works etc. vii) Insurance viii) Emergency Works

3.4 Replacement Works:

These include replacement of civil engineering and other works/ machinery and fall into the following two categories:

i) After the expiry of the normal life of an asset

ii) Pre-mature replacement on condition or obsolescence basis

(Note: The normal life of assets will be determined by a Committee in association with Finance Representative to be constituted by the Head of the Unit not below the rank of GM. Pre-Mature replacements would also be based on recommendations of such committee on condition or obsolescence basis).

3.5 Emergency Works:

These are works arising out of natural calamities and other exigencies directly affecting the operation/ activities of the unit as approved by the Unit Head not below the rank of GM.

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3.6 Enabling Works: These are temporary facilities including site office, accommodation, workshop,

roads/ pathways (including their strengthening), temporary civil works, stores, power & water facilities required for construction and their distribution, canteen facilities, sanitation, drainage etc. required for proper and efficient execution of work at site.

4.0 CLASSIFICATION OF WORKS:

The classification of works as Capital or Revenue will be based on the basic underlying accounting principles and guidelines issued by Director (Finance) from time to time.

4.1 Works requiring sanction/ approval of Board of Directors/ CMD / Directors:

i) New Capital Works ii) Replacements of assets or Additions, Alterations of capital nature to existing fixed

assets iii) Customer Project Related Capital Expenditure including Enabling Works.

These are to be provided for in the Capital Budget.

4.2 Works which can be executed with the approval / sanction at Unit level:

i) Items covered under lump sum provision within powers of Unit Head in Capital Budget sanction.

ii) Customer Project Related Capital Expenditure and Enabling Works covered under

lump sum provision in Capital Budget sanction. iii) Revenue Works/ Works Services covered by Revenue Budget. iv) Repairs/ Maintenance, Modifications, Reconditioning, Rebuilding/ Retrofitting of

Fixed Assets covered by Revenue Budget sanction. v) Customer Project Related Revenue Works/ Services to be met out of revenue

budget. vi) Emergency Revenue Works of inescapable urgency or affecting the safety of

Company’s Assets to be certified by Head of Unit not below the rank of GM along

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with justification. However, the financial implications including additional budget sanction, required, if any, should be sought post facto at the earliest.

vii) Topographical Survey and Soil Testing/ investigation works, consultancy,

technical/ model studies etc. at pre-bid/ pre-award (by customer) stage under lump-sum provision in the revenue budget.

5.0 CONTRACTS FOR WORKS/SERVICES: Contracts covered by the Works Policy will be termed as “CONTRACTS FOR

WORKS/ SERVICES”. 6.0 ESTIMATES: 6.1 Preliminary Estimates of work are required to be prepared for the purpose of getting

necessary administrative approval of the competent authority. 6.2 In the case of works costing more than Rs.2 lakhs, detailed estimates for technical

sanction shall be prepared after administrative approval but before tendering. 6.3 Schedule of Rates for facilitating preparation of estimates and serving as a guide

for the purpose of finalisation of tender could be prepared based on rates of PWD / Govt. Agency/ BHEL. The schedule of rates should be scrutinised by the Technical section, concurred by Finance and approved by competent authority.

6.4 Where Schedule of rates are not available, estimates should be prepared by

Technical/ Engg. section and approved by competent authority. Finance will verify the calculations.

6.5 Provision for contingencies, where considered necessary, are to be added at the

following rates on the cost of estimates to cover unforeseen contingencies: - Estimated cost up to Rs. 1 Crore : 5%, - Estimated cost more than Rs. 1 Crore : Rs. 5 lakhs plus 3% of the cost exceeding Rs. 1 Crore. 7.0 COMMITMENT REGISTER:

The sanction of Capital/ Revenue Budget relating to works should be split into convenient heads for the purpose of budgetary control and a commitment register shall be maintained for ascertaining the commitment against budget.

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8.0 EARNEST MONEY DEPOSIT & SECURITY DEPOSIT: Earnest Money Deposit and Security Deposit will be as per the Tender Documents. 8.1 Earnest Money Deposit (EMD): 8.1.1 Earnest Money is to be paid by each tenderer to ensure that the tenderer does not

refuse to execute the work after it is awarded to him. The rate of earnest money deposit shall be as under:

- Works costing up to Rs. 2 lakhs : Nil - Works costing more than Rs. 2 lakhs and up to Rs. 5 lakhs : Rs. 10,000/- - Works costing more than Rs. 5 lakhs and up to Rs. 10 lakhs : Rs. 20,000/- - Works costing more than Rs.10 lakhs and up to Rs. 20 lakhs : Rs. 40,000/- - Works costing more than Rs.20 lakhs and up to Rs. 30 lakhs : Rs. 60,000/- - Works costing more than Rs.30 lakhs and up to Rs. 50 lakhs : Rs.1,00,000/- - Works costing more than Rs.50 lakhs and up to Rs.100 lakhs : Rs.1,50,000/- - Works costing more than Rs.100 lakhs : Rs. 2,00,000/-

One time EMD will also be Rs. 2 lakhs.

For SAS jobs and other smaller/ routine type of jobs such as maintenance/ servicing etc., the maximum value of EMD as well as one time EMD will be Rs.1,00,000/-. EMD is to be collected in cash (as permissible under Income Tax Act), Pay order or Demand Draft only.

However,

i) The EMD may be waived or amount reduced in following cases with prior approval of the Head of the Contracting deptt., not below the rank of AGM: a) Joint Venture companies of BHEL b) Central/ State PSUs/ Government deptts/ Autonomous/ Educational/ Research

institutions c) Consultancy services; Banking, Insurance and other Professional services d) Leasing of assets e) Hiring of vehicles f) Catering, Horticulture & Sanitation services

ii) The EMD may be waived in other cases for reasons to be recorded and approved by the Unit Head.

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iii) One time EMD (lump sum amount) for exemption from payment of EMD with each tender may be permitted by next higher authority not below the rank of AGM limited to Unit Head.

8.1.2 EMD by the Tenderer will be forfeited as per Tender Documents if:

i) After opening the tender, the tenderer revokes his tender within the validity period or increases his earlier quoted rates.

ii) The tenderer does not commence the work within the period as per LOI /

Contract. In case the LOI / contract is silent in this regard then within 15 days after award of contract.

8.1.3 EMD given by all unsuccessful tenderers shall be refunded normally within fifteen

days of acceptance of award of work by the successful tenderer. 8.1.4 EMD shall not carry any interest. 8.2 Security Deposit: 8.2.1 Security Deposit should be collected from the successful tenderer. The rate of

Security Deposit will be as below:

- Up to Rs. 10 lakhs: 10% - Above Rs. 10 lakhs up to Rs.50 lakhs: Rs.1 lakh + 7.5% of the amount

exceeding Rs. 10 lakhs. - Above Rs. 50 lakhs: Rs 4 lakhs + 5% of the amount exceeding Rs. 50 lakhs. The security Deposit should be collected before start of the work by the contractor.

8.2.2 Security Deposit may be furnished in any one of the following forms:

i) Cash (as permissible under the Income Tax Act)

ii) Pay Order, Demand Draft in favour of BHEL

iii) Local cheques of scheduled banks, subject to realization.

iv) Securities available from Post Offices such as National Savings Certificates, Kisan Vikas Patras etc. (Certificates should be held in the name of Contractor furnishing the security and duly pledged in favour of BHEL and discharged on the back).

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v) Bank Guarantee from Scheduled Banks/ Public Financial Institutions as defined in the Companies Act. The Bank Guarantee format should have the approval of BHEL.

vi) Fixed Deposit Receipt issued by Scheduled Banks/ Public Financial Institutions

as defined in the Companies Act. The FDR should be in the name of the contractor, A/C BHEL, duly discharged on the back.

vii) Security deposit can also be recovered at the rate of 10% from the running bills.

However in such cases at least 50% of the Security Deposit should be collected before start of the work and the balance 50% may be recovered from the running bills.

(Note: In case of small value contracts not exceeding Rs. 10 lakhs and all SAS jobs, work can be started before Security Deposit is collected. However, payment can be released only after collection/ recovery of initial 50% Security Deposit).

viii) EMD of the successful tenderer can be converted and adjusted against the

security deposit. ix) The security deposit shall not carry any interest.

(Note: Acceptance of Security Deposit against Sl. No. (iv) and (vi) above will be subject to hypothecation or endorsement on the documents in favour of BHEL. However, BHEL will not be liable or responsible in any manner for the collection of interest or renewal of the documents or in any other matter connected therewith).

8.2.3 Security deposit shall not be refunded to the contractor except in accordance with the terms of the contract.

8.2.4 The Security Deposit may be waived or amount reduced in following cases with

prior approval of the Head of the Contracting deptt., not below the rank of AGM:

a) Joint Venture companies of BHEL b) Central/ State PSUs/ Government deptts. c) Autonomous/ Educational/ Research institutions for contract value upto Rs. 2

lakhs d) Repair/ Maintenance of equipments by OEMs/ OESs e) Rental/ Hiring of Premises/ Vehicles etc. where owner’s/ contractor’s assets

are being let out to/ used by BHEL f) Catering, Horticulture & Sanitation services for contract value upto Rs. 2 lakhs

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8.2.5 The Security Deposit may be waived or amount reduced in other cases for reasons to be recorded with prior approval of the Unit Head.

(Note: The requirement of Security Deposit or otherwise, as the case may be, shall be clearly specified in the tender conditions).

9.0 APPROVAL, REGISTRATION, DELISTING AND BANNING OF BUSINESS DEALINGS:

9.1 A general survey should be made at regular intervals. An advertisement should be

issued, at least once in a year, in two leading English and one local language newspapers and in the web-site of the Unit/ Company calling for tenderers for registration with the Company for specific types of works. Updation of list of registered contractors shall be an on-going activity. The required formats for enlistment and pre-qualification criteria etc. should also be hosted on the web-site of the Unit/ Company and prospective contractors shall be permitted to download and use these documents. A committee consisting of representatives, of the Construction, Purchase/ Contract, Finance Departments etc. should be formed with the approval of Unit Head for recommending for approval, retaining and de-listing of contractors. Contractors are to be evaluated with regard to (a) organizational soundness (organization specific), (b) quality system adequacy (system specific), (c) technical competence (job specific). Those who had tendered in the past and were considered suitable with regard to above, but were unsuccessful, should also be included in the list of registered contractors. A contractor registered in one unit/ region shall be considered as registered by another unit/ region for the same work/ class of work, without detailed assessment if the performance rating of the contractor is acceptable/ reasonably good.

9.2 Approval and de-listing should be shared among all units. While Registration and De-listing of contractor is to be shared amongst all the Units immediately, other information concerning contractors is to be shared on half-yearly basis to enable the recipient unit to use the information to the extent possible.

9.3 Each unit shall develop detailed procedure for registration and approval of

Contractors, their periodical performance, revaluation and feedback within overall framework of Works Policy and guidelines issued by Management from time to time.

9.4 Banning of Business Dealings: Banning of business dealings with the contractors may be resorted to for serious

lapses in performance/ misdemeanour such as abandoning the work without

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completing, resorting to unfair means (including false certification), not accepting the contract when awarded etc.

9.5 The banning of business dealings shall be done after careful evaluation of the

performance, facts and circumstances of the case by a duly constituted committee (as in Para 9.1) with the approval of Unit Head not below the rank of GM. The views of the legal departments shall also be obtained and placed in the file.

9.6 The proceedings for banning of business dealings should be done in a more

transparent manner and the contractor shall be given a reasonable opportunity, to the extent possible, to put forth his views and defend himself.

9.7 Care shall be taken that any partner / Director of the firm/ company of the

contractor banned does not get registered under different company / firm name. 9.8 The decision on banning of business dealings shall be shared amongst all Units /

Regions and offices of BHEL. The Unit/ Region banning the contractor shall forward a copy of the same to Corporate MM for company-wide circulation.

9.9 The decision to ban business dealings with a contractor shall be enforced initially

for a period of 3 years, beyond which this may be reviewed depending upon the circumstances on a case-to-case basis.

9.10 The decision to ban business dealing and its review after 3 years and its

recommendations thereof shall have the approval of Head of Unit not below the rank of GM.

10.0 GUIDELINES FOR AWARD OF WORKS THROUGH TENDERS: 10.1 Tender system should be adopted for award of works to secure the most

competitive rates. Three kinds of tenders are in vogue, namely Open (Web & press) Tender, Limited Tender and Single Tender. Qualifying requirement shall form part of the Tender Enquiry.

10.2 Normally, no advance payment shall be paid to the contractor. However, advance

payment in exceptional circumstances shall be interest bearing and secured through an equivalent bank guarantee and shall be limited to a maximum of 5% of the contract value. In these cases, advance payment conditions shall form part of the Tender Enquiry.

In exceptional circumstances, with due justification, Head of the Unit/ Region is empowered to approve proposals for payment of additional interim interest bearing advance to Contractors, against matching Bank Guarantee, for resource

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augmentation towards expediting work for project implementation. However, the unadjusted amount of advances paid shall not exceed 5% of the total contract value at any point of time. Recovery of advances shall be made from the running bills progressively such that the amount paid along with the interest is fully recovered by the time the contractor reaches 90% billing of total value of works to be executed. (Notes: 1. Interest rate shall be the prime lending rate of SBI plus 2%. 2. The Bank Guarantee is not required from Joint Venture Companies of BHEL. 3. These shall be included in the tender conditions).

10.3 LD (Liquidated Damages) / Penalty clause shall form part of NIT (Notice Inviting

Tender). 11.0 OPEN TENDER:

11.1 Open (Press) Tender shall be resorted to in such cases where adequate number of

registered contractors are not listed and/or work by Limited Tender is considered not desirable.

For this purpose, publication in the web-site of the Unit/ Company shall necessarily be resorted to. The fact of such publication on the web-site shall also be advertised in news papers having wide circulation as per the following guidelines:

Tender Value Modalities of Press Tender - Less than Rs. 5 lakhs : - - Rs. 5 lakhs to Rs.20 lakhs : One local daily (local to the site of work) - Rs. 20 lakhs to Rs.100 lakhs : One national daily - Above Rs 100 lakhs : Two national dailies

In addition, known sources may also be addressed. Tender documents shall be

hosted on the web site and prospective bidders shall be permitted to download and use these documents for submission of bids.

11.2 Enquiry shall be treated as an Open Tender if it is addressed to all the registered

contractors, not less than Six, for delegation of powers. 11.3 In case of single technically qualified and commercially acceptable response

against an Open Tender, the same shall be treated as a Single Tender for further processing/ delegation of powers.

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11.4 In case of technically qualified and commercially acceptable response from two/

three contractors, the open tender shall be treated as a Limited Tender for further processing/ delegation of powers.

12.0 LIMITED TENDER: 12.1 Limited Tender shall be addressed to at least three registered contractors. The

number of contractors to be addressed may be reduced with the approval of an executive not below the rank of GM or AGM (Head of Unit/ Head of SAS), in cases where three registered contractors are not available. Justification for selection of contractors has to be placed on record. While selecting the contractors, opportunity shall be given to all registered contractors by rotation. In exceptional circumstances, contractors that have been technically qualified earlier (in response to open tender) may be addressed with the approval of competent authority not lower than GM.

12.2 In case of single technically qualified and commercially acceptable response

against Limited Tender, the same shall be treated as a Single Tender for further processing/ delegation of powers.

13.0 SINGLE TENDER: 13.1 Single tender may be invited from the registered contractors in the following

situations duly certified by the Head of Indenting Department:

a) Proprietary nature b) Works recommended by Collaborators or their recommended vendors c) Customer’s specific contract requirement d) Urgency of requirement e) Works (pertaining to Re-conditioning, Re-building, Renovation & Modernisation,

Repair) by original suppliers of equipment/ services or their recommended vendors

f) Value of works being less than Rs. 20,000/-

However, contractors other than registered ones may be addressed for recorded reasons with the approval of an executive not below the rank of GM or AGM (Head of Unit/ Head of SAS).

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13.2 Details of all contracts awarded on Single Tender basis valued above Rs.100 lakhs shall be sent to Corporate Finance every month.

14.0 SMALL VALUE WORKS AT PROJECT SITES: Small value works at Project Sites of PS, TBG and ISG including Service Sites

shall be carried out as per the Policy with the approval of:

a) Site In charge of the rank of E-6 & above: - Open/ Limited Tender: Up to Rs. 10 lakhs (Rupees ten lakhs)

- Single Tender : Up to Rs.2 lakhs (Rupees two lakhs)

b) Site In charge of the rank of E2 to E5: - Open/ Limited Tender: Up to Rs.3 lakhs (Rupees three lakhs) - Single Tender : Up to Rs.1 lakh (Rupees one lakh)

For these works at sites, Works Policy/ related procedural requirements shall be followed.

Locally available (other than registered) contractors who are technically qualified can also be included in the list of tenderers. A report for all such works undertaken at site shall be submitted to the Unit Hqrs. on a monthly basis.

15.0 MODE OF COMMUNICATION: All tender enquiries, except the press enquiries, shall be through Registered Post/

Speed Post/ Courier Service. Modes like Fax/ E-Mail/ Internet/ EDI (Electronic Data Inter-change) can also be used in addition to despatch through registered post/ Speed Post/ courier service.

16.0 LATE TENDERS:

Tenders received after the specified time of their “Opening” are treated as Late Tenders and are not considered normally. Late tenders, however, may be considered only if the price bids of other tenderers already received have not been opened and for recorded reasons such as (i) Scarcity conditions, (ii) Suspected cartel formation, (iii) Poor response against open/ limited tender etc. Approval of the next higher authority, not below the rank of AGM limited to Unit Head may be obtained in advance for consideration of late tenders.

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Late tenders not considered shall be returned to the respective bidders with suitable intimation.

17.0 OFFERS BY TELEGRAM/ TELEX/ FAX/ E-MAIL / INTERNET ETC.:

Such offers shall be considered as per terms of NIT (Notice Inviting Tender).

18.0 OPENING OF TENDERS: 18.1 Adequate notice should be given to contractors for submission of quotation which

should not be less than two weeks. However, in case of open tender, the same would be minimum of three weeks, and in special cases like emergency work/ customer project related urgent works, this limit may be relaxed by the Competent Authority after recording the reasons thereof.

18.2 Tenders shall be opened at the specified place at an appointed date and time by

the executing agency in the presence of Finance representatives and also tenderers who choose to be present. Proper records of proceedings of tender opening shall be maintained. In-camera opening can be resorted to in exceptional cases with the approval of General Manager/ Head of Unit. The tenderers should be duly informed about the in-camera opening in the NIT itself.

18.3 In the case of Capital Works & Work/ Services relating to Customer Project, for

works valuing more than Rs. 5 lakhs, the offer shall normally be invited in two parts, except for specific recorded reasons. In the case of other Works/ Services where (a) specifications and customer requirements are not very clear (b) vendors are not registered/ approved, offers shall be invited in two parts viz. Part-1 Technical cum Commercial Offer and Part-2 Price Bid. The technical cum commercial offers shall be opened first, discussed and technically acceptable tenders finalised.

18.4 Loading factors for various techno-commercial deviations to be taken into account

for arriving at the “cost to BHEL” and their loading criteria shall be included in NIT/Enquiry. Any new loading factors, after technical bids are opened, shall be intimated to all the technically acceptable tenderers before opening of the price bid. Afterwards, the price bids of techno-commercially acceptable tenders shall be opened in their presence.

18.5 Reasons for rejecting a tender on technical/ commercial grounds should be clearly

recorded and approved by the authority competent to award the work as per estimate. The tenderer whose tender is rejected should be communicated in writing of the rejection with the reasons, after award of work and acceptance by the successful bidder.

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18.6 In case of minor changes in scope and/ or technical specifications or commercial terms, having price implications, technically accepted contractors shall be asked to submit their revised bid in line with the revised scope and/ or revised specifications and terms and conditions. In such a case, the latest price bid alone shall be opened. However, if necessary, original bid may also be opened with the approval of Head of the unit, not below the rank of GM, under exceptional cases after recording reasons.

18.7 Evaluation shall be on the basis of delivered cost, i.e. “total cost to BHEL”. For

evaluation, exchange rate (TT selling rate of SBI) as on scheduled date of tender opening (part-I in case of two part bid) shall be considered. This shall be stated in the tender conditions.

19.0 TENDER COMMITTEE: A Tender Committee for all works above Rs.2 lakhs shall be formed. 20.0 ROLE OF TENDER COMMITTEE:

The role of Tender Committee as detailed below is indicative and not exhaustive. 20.1 The tender committee will be responsible for the following: i) To judge the following as per NIT:

a) Suitability of all the tenderers in terms of their technical soundness for the contract

for works/ services to which the tender relates on the basis of technical data. b) Past performance. c) Bidders’ financial statement of accounts including tax assessment etc. d) Whether the tenderers fulfill the qualifying requirements.

ii) To deliberate on techno-commercial aspects to bring all tenderers at par. iii) To ensure that offers have been technically and commercially loaded in respect of

various factors mentioned in the tender enquiry.

iv) To comment on: a) Deviations from specifications, drawings etc. b) Special instructions imposed by the tenderer. c) Specifying clearly whether modification etc. are acceptable. d) Scope of work, if changed, will necessitate calling of fresh tenders.

15

WORKS POLICY


v) To certify that the tendering process as per the policy has been followed. vi) The tender committee should also state in its recommendation whether the prices

are reasonable and commitments are within the approved budget. 20.2 The responsibility of individual members will be confined to their specific area/

function with collective responsibility for the final recommendations. 20.3 A tender committee will consist of at least three officers one each from (a)

Contracting Department, (b) Finance and (c) Indenting/ Construction and/or Engineering Department (nominated by respective Head of Department). Executive(s) from any other department(s) may also be nominated, if required.

20.4 The tender committee will also conduct negotiations, if required. No negotiation

shall be conducted with the contractors by a single individual. All the proceedings of the Committee must be clearly recorded before the competent authority’s sanction is obtained.

20.5 The rates at which works are to be awarded should be reasonable with reference to the estimates. Excess variations up to 10% between rates tendered and the rates as per estimates could be agreed to by the authority competent to award the work.

However, in individual cases particularly in respect of turnkey jobs or any prestigious job with a definite date line to be met, the Unit Head not below the rank of a General Manager, may relax the above limits up to a maximum of 20% after recording the justification for the same. In case of variance beyond 20%, the estimates may have to be re-examined and normally re-tendering shall be resorted to.

21.0 NEGOTIATIONS: 21.1 Post tender negotiations with L-1 (lowest techno-commercially accepted tenderer)

or single tenderer only should be conducted by the tender committee as an exception with the prior approval of the next higher authority competent to award the work (limited to Unit Head). All negotiations shall be conducted in terms of instructions/ guidelines issued by the Govt./ CVC/ Management from time to time in this regard.

21.2 In the absence of tender committee, where the value of work is less than Rs.2

lakhs, negotiations have to be generally avoided. However, where negotiation is considered absolutely necessary, for reasons to be recorded in writing, a separate

16

WORKS POLICY


negotiation committee on the lines of a tender committee shall be formed to conduct the negotiation.

22.0 PRE-BID TENDER: 22.1 A pre-bid tender is desirable to firm up the estimated cost of high-value works and

services. These high value works and services will form part of the bid to be submitted by BHEL to comply with contract requirements given in the tender of prospective customer.

22.2 Following additional guidelines shall be followed in respect of Pre-bid Tender:

i) A committee consisting of (a) Construction/ Indenting and/ or Engineering (b) Contracting/ Purchase (c) Marketing/ Commercial and (d) Finance shall be constituted by Head of Unit not below the rank of GM for entering into MOU for pre bid tie up.

ii) Bids may be obtained from approved contractors and opened in camera, which

should be indicated in the tender enquiry. For an unapproved contractor the procedure for registration of contractors as contained in para 9 shall be followed and their name registered as approved contractors before their name is included.

iii) Negotiations with L1 only, as per para 21 of the policy, may be conducted by the

Committee wherever required, and an MOU entered into with due approval of competent authority.

iv) MOU shall contain all major terms and conditions to be included in the contract,

with ample scope for negotiation with customer without involving the tenderer. MOU shall be as comprehensive as possible requiring minimum alteration at the time of contract and shall specify Customer - BHEL – Contractor back – to - back arrangement/ commitment to the maximum extent possible.

v) MOU should contain stipulations that in the event of price reduction during

negotiation by BHEL with the customer, corresponding reduction has to be obtained from the contractor. Major terms and conditions such as acceptance of LD/ penalty, guarantee/ warranty, payment terms including advance, if any, etc., shall be on a back- to- back basis and clearly spelt out in the MOU. Conditions for advance payment shall form part of Tender Enquiry.

vi) MOU should contain adequate provisions for variations in financial commitments

quantified against additions, deletions and changes in scope of works, and services preferably identifying them against bills of materials, rate per unit of services.

17

WORKS POLICY


vii) MOU shall contain adequate safeguards regarding requisite technical parameters,

guarantee requirements along with appropriate clause for alteration in prices in case of deviation from the stipulated technical parameters.

viii) Within 30 days of signing of MOU, 1% of the value of the MOU shall be furnished

by the contractor as bid-bond in the form of Bank Guarantee or Security Deposit, etc., in order to ensure the contractor’s continued association and linkage with BHEL, till the prospective customer finalise the tender.

ix) MOU will be converted into a Contract on receiving the firm order from the

customer without any major deviations/financial implications keeping in view the spirit of the MOU and without again going through the tender procedures.

On entering MOU, intimation for the same shall be sent to concerned Business Sector Head.

23.0 REPEAT ORDERS: 23.1 Repeat orders without calling for fresh tenders may be placed only in case of

contracts not exceeding Rs. 50 lakhs, after recording the reasons, with the approval of the next higher authority limited to Unit Head.

(Note: Original order should not have been awarded on single tender basis).

23.2 This is subject to the following: i) there is no change in the scope of work or there is minor variation in scope,

specification etc. which may be settled by a duly constituted committee including finance representatives and reasonable price arrived at for the required scope based on the earlier order for the same/ similar scope, (Note: Minor variation for this clause will mean either increase or decrease in value up to 5% of the item/ service and overall effect of the increase and decrease put together shall be limited to 5% of the contract value). (This clause shall be initially applicable only till the end of the current five year plan i.e. March 2012. Thereafter, if necessary, renewed clearance of the BHEL Board of Directors shall be sought for a specific period of time).

ii) there is no downward price trend and there are benefits in execution of repeat

order works,

18

WORKS POLICY


iii) it is advantageous to BHEL by way of reducing cycle time, iv) the party is competent to carry out the job, and v) performance of the party in execution of the original/ previous contract had been

found satisfactory.

(Note: In the process of repeat order, initial quantity discount/ reduction in price by the Contractor due to reduced effort on his part (design/ marketing effort etc.) shall neither be treated as downward price trend nor as negotiation. The discount/ price reduction shall, however, be reviewed and recommended by the tender committee).

23.3 Repeat order should be supported by latest estimates duly vetted by finance. 23.4 Each Repeat Order value should not exceed the originally ordered value and could

be resorted to against previous order within 2 years from the date of issue or 1 year from the completion of original work, whichever is earlier. An order can be repeated only once.

24.0 RATE CONTRACTS: 24.1 Works of recurring nature capable of being executed by more sources such as

maintenance of fixed assets, horticulture, sanitation, material handling, job works, transport, miscellaneous contracts, service jobs, etc. may be covered under long term rate contracts from approved parties for periods not exceeding two years by floating open/ limited tender.

The rate contract can be further extended for maximum period of 3 months on the existing terms and conditions.

The rate contract can also be extended for a maximum period of one year for recorded reasons, provided there is no downward trend in prices.

Extension of rate contract/s shall require approval of next higher authority, limited

to Unit Head. 24.2 However, during the course of the rate contracts, if any visible downward trend in

price is observed suitable steps shall be taken for short closure. 24.3 No repeat orders shall be placed for a rate contract.

19

WORKS POLICY


25.0 SPLITTING THE CONTRACTS:

In cases where the work to be executed is much more than what L-1 alone can undertake within the time-frame specified in the tender or for operational convenience (the reasons of which are to be recorded in writing), the other tenderers in order of their competitiveness and depending upon the number of parties required may be asked to match the overall L-1 rate for the work. The distribution of work is to be done in a fair, transparent, and equitable manner. The intention and the manner to split the work to more than one party shall be stated in the tender enquiry.

26.0 SHARING OF INFORMATION:

Units/ Regions shall share the information with sister Units/ Regions by hosting the following information on their respective intranet sites: a) Registered vendors and their performance b) Prices as per orders placed to enable the other Units/ Regions to know the

price trend of various works c) Banning of Business/ De-listing of contractors.

27.0 FINANCIAL CONCURRENCE:

Financial concurrence implies a second check to ensure that the policy, delegation of powers and all administrative instructions are complied with, apart from a thorough checking of all calculations. Power for according financial concurrence to be exercised by the executives of finance department will be as per powers of Financial Concurrence in Chapter –III.

28.0 RE-TENDERING:

Re-tendering may be resorted to after the administrative approval of the next higher authority competent for invitation of bids (not below the Head of Purchase/ Contracts limited to Unit Head) under the circumstances such as:

a) Inadequate response, b) Unreasonably high price, c) Suspected cartel formation, d) Sudden slump in market prices, e) Negotiation has not given desired results; f) Major changes in Scope. In case L-1 bidder backs out, re-tendering shall be done.

20

WORKS POLICY


29.0 COMPENSATION FOR COMPRESSION:

In case of delays not attributable to the Contractor, additional efforts to be made by the Contractor to expedite completion of balance works may be suitably compensated. A committee of General Managers (including Head of Finance) shall recommend such proposals, on case to case basis, for approval of the Unit Head.

(Notes: i) This clause is to be operated in exceptional circumstances only. ii) This clause is applicable for Project sites of Power Sector, TBG and ISG. iii) Given the present order book position of the Company, this clause shall,

initially, be applicable only till the end of the current five year plan i.e. March 2012. Thereafter, if necessary, renewed clearance of the BHEL Board of Directors shall be sought for a specific period of time.

iv) The suitable compensation worked out by the Committee shall be supported

with all relevant/ necessary data. A self explanatory/ speaking note leading to payment of such compensation to the contractor will be made by the committee.

v) The Committee shall also identify and inform the agency (ies) responsible for

delay/s to avoid recurrence in future. The decision of the Committee regarding the agencies responsible for the delay shall be final).

30.0 WORK EXECUTION IN OTHER AREAS:

Works can also be done by the existing contractor in other areas not described in the contracted scope of work, provided:

a) Such areas are in the same project site. b) Items, rates and other related conditions of contract remain unchanged. c) The total value of work executed is within the variation limits specified in the

original contract. Engineer Incharge shall obtain concurrence of Finance (within powers as delegated in DOP for financial concurrence, Chapter-III) and approval of Site Incharge (not below the rank of DGM) before execution of such works.

21

WORKS POLICY


31.0 RECOVERY RATES FOR MATERIALS AND TOOLS & PLANTS (Not specified in the contract):

In case delays are not attributable to the contractor and stores & materials are issued by BHEL / Customer to the contractor for expediting the work, the departmental charges (overhead charges) shall be operated at 5% with the concurrence of Head of Finance and approval of Unit Head. Any further reduction beyond 5% shall require concurrence of Director (Finance) and approval of CMD. When the contractor is not responsible for delay and the works needs to be completed within a specified time frame, under exceptional circumstances, the services of BHEL T&P along with operator and fuel can be extended to the contractor with the concurrence of Head of Finance and approval of Unit/ Region Head at the charges to be intimated by Unit/ PS Finance every year.

32.0 EXTRA WORKS:

Extra works shall be paid as per the terms of the contract and in accordance with delegation of powers.

33.0 WORKS THROUGH PERSONAL ENQUIRY:

Works up to Rs. 20,000/= (limited to Rs. One lakh per annum per site in Unit/ Region) may be carried out without obtaining quotations by a representative duly authorised by an officer not below the rank of DGM. Payment can be made by cash/ cheque or draft.

34.0 MODIFICATION IN FINANCIAL LIMITS: The financial limits in the Works Policy and Delegation of Powers are based on the

price indices as on Jan 2007. With the concurrence of Director (Finance) and approval of CMD, the financial limits may be modified.

35.0 GOVT. GUIDELINES/ INSTRUCTIONS:

Guidelines/ Instructions issued by Govt. from time to time which are mandatory and have the force of Law (such as CVC instructions and Presidential directives) shall be adhered to.

36.0 MISCELLANEOUS:

The following items will be approved by the authority one step above the authority competent to approve the award of work. An executive not lower than DGM and

22

WORKS POLICY


limited to Unit Head will exercise these powers except for small value works at project sites covered under Clause 14 of this Policy: i) Invitation to tender

ii) The type of tender to be adopted i.e. open, limited or single

iii) Reduction of notice period for submission of Offer

iv) Formation of Tender Committee(s).

37.0 INTERPRETATIONS / CLARIFICATIONS:

Director/ E, R&D shall constitute a Committee every year, comprising officers one each from Corporate MM, Corporate Finance (nominated by Director/ Finance) and Power Sector (nominated by Director/ Power) for deliberations on interpretations/ clarifications for implementation on matters covered in this policy. Based on the decision of this committee, necessary clarifications shall be issued by Corporate MM.

- The Works Policy has to be read along with the Works Accounts Manual.

- Any deviation, which is not in conformity with the Works Policy and the

delegation of Powers thereto, shall have the concurrence of Director (Finance) and approval of CMD.

- This Works Policy supercedes the earlier Works Policy and all related circulars/

/instructions issued from time to time.

23

DELEGATION OF POWERS

CHAPTER – II

24

DELEGATION OF POWER

1. The Works Policy outlined in Chapter-I is based on the philosophy of centralized policy making and de-centralized administration of works. Within the framework of provisions of this Policy, delegation of powers has been framed. However, Units may reduce the financial limits within overall ambit of delegation of powers, under intimation to concerned Functional Director and Director (Finance).

2. These powers cannot be sub-delegated to a lower authority. In exceptional cases where such sub-delegation is

considered necessary, prior approval of concerned Functional Director and Chairman and Managing Director shall be obtained.

3. All the Delegation of Powers are subject to the provisions of Companies Act, 1956 as amended from time to time,

Memorandum & Articles of Association of the Company, the directives issued by the President of India, the Policies laid down by the Board of Directors and also subject to such directives as may be given from time to time by CMD / Functional Directors / Corporate Office / Head of the Unit.

4. The delegations are subject to the availability of funds in the approved Capital / Revenue and Manpower

Budgets.

5. All Preliminary / Detailed estimates will be approved by the authority competent for Administrative and Technical Approval.

25

6. All material modifications would require sanction of Board of Directors / Government. The following will form material modifications:

i) A variation to DPR / other estimates sanctioned by higher authorities affecting scope or output of the plant as originally approved, manufacture of new product, or deletion of products previously approved and included in the scope of the Plant.

ii) A variation affecting the scope or output or product-mix of plants already in operation and major modification to the type and design of the equipment manufactured.

iii) Re-appropriation of funds provided in the budget for the factory to township.

iv) Facilities for a line of production.

v) Expenditure in excess of the lump sum provision made in the Budget for minor/ revenue charged items.

26

FORMATION OF TENDER COMMITTEE/NEGOTIATION COMMITTEE FOR CAPITAL WORK,

REVENUE WORKS / SERVICES AND CUSTOMER PROJECT RELATED REVENUE WORKS/ SERVICES

S1. No. Nature of Tender Members

Open Tender

Limited Tender

Single Tender Convener Finance Indenter Special

Invitee

1. 10 5 NIL Engineer Accounts

Officer Engineer Engineer

2. 20 10 2 Sr. Engineer Sr. Accounts

Officer Sr. Engineer Sr. Engineer

3. 50

20

5 Dy. Manager Dy. Manager Dy. Manager Dy. Manager

4. 100

50

10 Manager Manager Manager Manager

5. 200 100 20 Sr. Manager Sr. Manager Sr. Manager Sr. Manager

6. Exceeding 200

Exceeding 100

Exceeding 20 DGM DGM DGM DGM

Note: 1. Committee to be formed for works above Rs.2,00,000 (Rs. Two lakhs). 2. When the material is issued by BHEL, the powers detailed above will be exercised to the extent of 50%. 3. In case executive of the level shown above is not available for any reason, an executive one level below can participate.

Where due to the non-availability of the executive of the required rank, lower level executives are to be put on the committee, it may be done with the specific approval of next higher authority not below the rank of DGM. The representative should not in any case be below the rank of E1 grade.

(Value in Rs. Lakhs)

27

SI. No.

NATURE OF WORK

ED and

GGM (Head

of Unit)

GGM (others)

and GM

(Head of Unit)

GM (others)

and AGM

(Head of Unit)

AGM (Not

being Head

of Unit)

Sr. DGM/ DGM

Sr. Mgr. Mgr. Dy.

Mgr. Sr.

Engr. Engr.

1. ADMINISTRATIVE AND TECHNICAL APPROVAL – CAPITAL WORKS (within the budget sanction)

FULL FULL FULL 100 50 - - - - -

2. ADMINISTRATIVE AND TECHNICAL APPROVAL REVENUE WORKS/ WORKS SERVICES

(A) Customer Project Related Revenue Works FULL FULL FULL 200 100 50 - - - -

(B) Other Revenue Works including Repairs & Maintenance and Modification to assets

FULL FULL FULL 200 100 50 - - - -

(C) Emergency Works FULL 200 100 - - - - - - -

3. R & D PROJECTS

Sanction of Expenditure on approved R&D Projects:

- each case FULL 25 10 - - - - - - -

- annual limit FULL 100 50 - - - - - - -

Note: This is subject to terms and conditions laid down from time to time for scrutiny by respective Product Committees / Technical Committees.


28

SI. No.

NATURE OF WORK

ED and GGM

(Head of Unit)

GGM (others)

and GM

(Head of Unit)

GM (others)

and AGM

(Head of Unit)

AGM (Not

being Head

of Unit)

Sr. DGM/ DGM

Sr. Mgr. Mgr. Dy.

Mgr. Sr.

Engr. Engr

4

AWARD OF WORKS

(A) Open Tender FULL FULL 300 250 100 50 20 10 - -

(B) Limited Tender FULL 200 150 125 50 20 10 - - -

(C) Single Tender FULL 100 50 20 10 - - - - - (D)

Pre-bid MOUs on back to back basis.

FULL

- - - - - - - - -

(E) Splitting the contracts

One step above the normal powers limited to the power of Head of Unit.


29

SI. No.

NATURE OF WORK

ED and

GGM (Head

of Unit)

GGM (others)

and GM

(Head of Unit)

GM (others)

and AGM (Head

of Unit)

AGM (Not

being Head

of Unit)

Sr. DGM

/ DGM

Sr. Mgr. Mgr. Dy.

Mgr. Sr.

Engr. Engr.

5. EXCESS OF EXPENDITURE

Excess of Expenditure over sanctioned cost / approved estimates / awarded contract value on account of Rate Revision, Over- Run Charges, Price Variance, Increase in quantity etc.

5.1 Capital Works As per Capital Budget Manual/ Delegation of Power as approved by the Board from time to time.

5.2 Customer Project Related Revenue Works and other Revenue Works including Repair, Maintenance & Minor Modifications

FULL Up to 10% in respect of contracts Awarded under their powers. - -

- -

6. REAPPROPRIATION

Re-appropriation of Capital sanction between various components of the schemes / projects approved by Board of Directors / CMD / Director

As per Capital Budget Manual/ Delegation of Power as approved by the Board from time to time.


30


Sl No.

NATURE OF WORK

ED and

GGM (Head

of Unit)

GGM (others)

and GM

(Head of Unit)

GM (others)

and AGM (Head

of Unit)

AGM (Not

being Head

of Unit)

Sr. DGM/ DGM

Sr. Mgr. Mgr. Dy.

Mgr. Sr. Engr.

Engr.

7.

Amendment to contract clauses / conditions (other than those specifically provided in this DOP)

FULL

FULL (in respect

of contracts awarded

under their powers)

FULL (in respect

of contracts awarded

under their powers)

- - - - - - -

8. Pre-bid expenses like consultancy, testing, survey etc. FULL 20 10 - - - - - - -

9. Enlistment of contractors FULL FULL FULL - - - - - - -

10.

Write Off of the loss of Measurement Book

FULL In

consul- tation

with Fin.

- - - - - - - - -

11.

To fix schedule of rates for the purpose of estimates

FULL FULL (UNIT HEAD ONLY)

FULL (UNIT HEAD ONLY)

- - - - - - -

31

Sl No. NATURE OF WORK

ED and

GGM (Head

of Unit)

GGM (others)

and GM

(Head of Unit)

GM (others)

and AGM (Head

of Unit)

AGM (Not

being Head

of Unit)

Sr. DGM/ DGM

Sr. Mgr.

Mgr

Dy. Mgr.

Sr. Engr.Engr.

12.

Changes in tender clauses and Relaxation of General Conditions of Contract (Pre-award stage)

FULL FULL FULL - - - - - - -

13 (a)

Extension of time for completion of total work or part thereof, after recording the justification for the same where the delay is not attributable to the contractor

FULL

FULL (UNIT

HEAD ONLY)

FULL (UNIT HEAD

ONLY )

- - - - - - -

13 (b)

Extension of time for completion of total work or part thereof, where the delay is on account of the contractor, without waiver of LD


14. Late Tenders received after specified time of their "Opening"

FULL Full powers in r/o contracts approved by lower authority - - - - - -

15.

Acceptance of Bonus clause in the contract for earlier completion of work on a back to back basis


32


ED and

GGM (Head

of Unit)

GGM (others)

and GM

(Head of Unit)

GM (others)

and AGM (Head

of Unit)

AGM (Not

being Head

of Unit)

Sr. DGM/ DGM

Sr. Mgr.

Mgr

Dy. Mgr.

Sr. Engr. Engr.

16 (a)

Sanction for supplementary items and deviation from approved quantities

FULL Full powers for works awarded by lower authority. - - - - -

16 (b)

Sanction of items not covered in the contract & extra works

FULL

Up to 10% in respect of contracts awarded under their powers. Note: Irrespective of the original approving authority, extra works can be sanctioned by the above levels upto 10% of their approving powers for award of works (after confirming the type of original tender – whether open, limited or single)

- - - - -

17.

Sanction part rates out of the contract rates for payment in Running Bills.

FULL FULL FULL FULL FULL FULL FULL - - -

Note: 1. Provided no part payment is recommended till 25% of the value of work is not turned out. 2. Not exceeding 80% of the rate, in two installments, for the work certified to have been executed.


33

(Value in Rs. Lakhs))


ED and

GGM (Head

of Unit)

GGM (others)

and GM

(Head of Unit)

GM (others)

and AGM (Head

of Unit)

AGM (Not

being Head

of Unit)

Sr. DGM/ DGM

Sr. Mgr. Mgr. Dy.

Mgr. Sr. Engr. Engr.

18.

Statutory levies: Revision in rates as a result of imposition of new statutory levies or due to change in existing statutory levies within the contractual delivery period.

FULL FULL FULL Full powers for works awarded by lower authority.

- - -

19.

Acceptance I Amendment to the Price Variation Clause in the contract.

FULL FULL - - - - - - - -

20.

Acceptance / payment of over-run compensation where the delay is not attributable to the contractor (Pre-award as well as post award) (Note: The compensation under Sl. No. 20 or 21 and 22 put together shall not exceed 15% of the contract value.)

Limited to 10% of

the contract

value

- - - - - - - - -

34

Sl No NATURE OF WORK

ED and GGM (Head

of Unit)

GGM (others)

and GM

(Head of Unit)

GM (others)

and AGM (Head

of Unit)

AGM (Not being Head

of Unit)

Sr. DGM/ DGM

Sr. Mgr. Mgr.

Dy. Mgr.

Sr. Engr. Engr.

21.

Acceptance / payment of over-run compensation, where the delay is not attributable to the contractor, on back-to-back basis (Pre-award as well as post award) ( Note: The compensation under Sl. No. 20 or 21 and 22 put together shall not exceed 15% of the contract value.)

FULL - - - - - - - - -

Escalation claims in respect of contracts where Price variation Clause has not been provided. ( Note: The compensation under Sl. No. 20 or 21 and 22 put together shall not exceed 15% of the contract value.)

10% of the

contract value with

Financial Concur- rence

- - - - - - - - - 22.

Note: For firm price contracts; a) Escalation claims beyond 10% shall require approval of next higher authority with financial concurrence, b) Claims beyond 25% will require approval of CMD.


35

Sl No NATURE OF WORK

ED and GGM (Head

of Unit)

GGM (others)

and GM

(Head of Unit)

GM (others)

and AGM (Head

of Unit)

AGM (Not being Head

of Unit)

Sr. DGM/ DGM

Sr. Mgr. Mgr.

Dy. Mgr.

Sr. Engr. Engr.

Rs. Two lakhs

- - - - - - - - - 23.

Waiver of LD due from Contractors

With financial concurrence from Head of Finance

Note: All cases of waiver of LD due from contractors of more than Rs. 2 lakh will require approval of respective Functional Director (or CMD, in case of Units directly reporting to CMD) with concurrence of Director (Fin).

24.

Changes / relaxation in terms of payment in existing contracts.

Full powers for contract awarded by lower authority

- - - - - - -

For contract approved by ED and GGM (HOU), approval of functional director (or CMD, in case of Units directly reporting to CMD) will be required with concurrence of Director (Finance).


36

AD-HOC PAYMENTS TO CONTRACTORS AGAINST RUNNING BILLS

1. As a general rule, no advance shall be payable to the contractor except according to the terms of the tender / contract.

2. Payment for the work done and services rendered by the contractors are to be made on the basis of the work bills submitted by them. At the time of payment, it should be ensured that the contractor has fulfilled his statutory obligations with respect to the labour laws.

3. At times, some ad-hoc payments, apart from those payable according to the terms of the contract, become necessary to be paid to the contractors in the interest of work. Such payments to the contractors shall be made only on the written request of the contractor for financial aid in the shape of part payment against running bills received from the contractor for the work done by him. Such payments shall be made only on the certificate of an officer not below the rank of E-3 for the work against which ad-hoc payments are recommended, that the work has actually been done at site and that the contractor has not previously received any such payments.

4. Such payments shall be made on exceptional basis when it becomes absolutely necessary to make statutory payments by the contractor. This should not become as general or continuous process for making such payments during the course of execution of the contract. Such payments up to 10% of the contract value or 75% of the running bill against which payment has been recommended, whichever is less, shall be made with prior sanction of Head of the Contract Department at Unit or Regional Head-quarter not below the rank of AGM. Beyond this limit, approval of the Head of the Unit shall be required.

5. All such ad-hoc payments shall be approved by the Competent Authority with financial concurrence from Head of Finance of the Unit.

6. In case such ad-hoc payments are made in exceptional circumstances duly approved by the competent authority, it should be adjusted in the next work bill. In case the payment could not be adjusted in the next work bill, the deferment should not prolong for more than 2-3 next months bills and that too with the approval of the Head of the Contract Department of the Unit / Regional Head- quarter, as the case may be, with financial concurrence of the Unit Finance Head.

7. In any case before the close of the financial year, all such ad-hoc payments should be reviewed.

37

POWERS OF FINANCIAL CONCURRENCE

CHAPTER – III

38

POWERS OF FINANCIAL CONCURRENCE 1. Under the powers vested in him by the Board of Directors, the Chairman & Managing Director hereby authorizes the

executives of the Finance & Accounts Department to severally exercise under the general supervision and control of Director (Finance) the powers in regard to Financial Concurrence to the extent indicated here-in-after.

2. Authority for according financial concurrence shall be executive one step lower than the approving authority. In the absence of

finance executive of the required rank, powers of financial concurrence can be sub-delegated by Director (Finance). 3. While exercising these powers the executives of the Finance & Accounts Department will, inter alia, ensure that the proposals

conform to the provisions of the Companies Act, 1956, Memorandum and Articles of Association of the Company, the directives issued by the President of India, the policies laid down by the Board of Directors and also subject to such directives as may be given from time to time by CMD / Functional Directors / Corporate Office / Head of the Unit, availability of funds in the approved Capital / Revenue and Manpower budgets, and powers have been exercised by the executives of the concerned departments in accordance with the approved scheme of Delegation of Powers.

4. Executives entrusted with the responsibility of administering Public Funds should adhere scrupulously to the age-old and

universally accepted canons of financial propriety which are as follows:

a) Every officer/ employee should exercise the same vigilance in respect of expenditure incurred from company’s money as a person of ordinary prudence would exercise in respect of his own money.

b) The expenditure should not be prima-facie more than the occasion demands. c) Powers of sanctioning expenditure should not be exercised to pass an order which will directly or indirectly be

advantageous to the authority sanctioning the expenditure; and d) The amount of allowances granted to meet expenditure of a particular type should be so regulated that these are not on

the whole a source of profit to the recipients.

5. The proposals based on the recommendations of the Negotiation Committee shall be concurred in by the next higher Authority subject to Powers of Financial Concurrence as per sl. no. 2 above.

39

6. Financial concurrence would be necessary in all cases except the following cases:

(i) For all proposals, including amendments, up to the value of Rs. 50,000/- (ii) Reduction of notice period for submission of offer. (iii) For amendment to contracts for works due to variation in the technical specification except those affecting price or total

economics. (iv) For administrative and technical sanction. (v) Detailed Estimate up to the value of Rs. 2 lakhs.

7. Modalities and further administrative instructions on Financial Concurrence can be issued by Director (Fin) from time to time.

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