1

Table of Contents

Introduction about Project..........................................1

1.Describe the current trends in fishing port project procurement...2

1.1EPC...........................................................2

1.2 Public Private Partnership (PPP) Current Trend...............2

1.3Selecting the most suitable current trend for fishing port....6

1.4The hired subcontractor.......................................6

1.5Conclusion....................................................7

2.Procurement Issues................................................7

2.1Issues originating from government, professional, trade and

statutory 7

2.2Recommendation from the sector and government sponsored report.

7

2.3Developments and trends in practice...........................8

2.4Aspect of practice............................................8

2.5The Egan reports..............................................8

2.6Procurement issues of this project...........................9

3. Identifying and discussing the international project Procurement10

3.1 Design-Bid-Build (Traditional Method).......................11

3.2 Design and Build............................................13

3.3Management Procurement.......................................14

3.4The most suitable procurement method for fishing port........15

3.5Conclusion...................................................15

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3.6Recommendation...............................................15

4. Analyze the sequence of ‘design and construction’ in Design and

Built............................................................15

5. Describe the roles and responsibilities of parties in procurement

process in the project...........................................16

6. Outline the purposes and activities of client and contractor and

consultant.19

7.Analyze contractual arrangement used with subcontractor..........20

7.1Nominated Subcontract........................................20

7.1.1Intentions of Parties...................................21

7.1.2Commencement and completion............................21

7.1.3Control of The Works....................................22

7.1.4Payment.................................................23

7.1.5Statutory Obligations...................................24

7.1.6Injury, Damage and Insurance............................24

7.1.7Determination...........................................25

7.1.9Adjudication, Arbitration and Legal proceeding.........26

7.2Domestic Subcontractor...................................27

7.2.1Contractual Arrangement.................................27

7.3The proposed subcontractor for fishing port..................29

8. Evaluate the types of contractual arrangement used with supplier.

29

8.1Contractual Arrangement......................................29

8.2The contractual arrangement applied for this project.........30

8.3The self-evaluation for limitations..........................30

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List of TablesTable 1 :The advantages and disadvantages of traditional method....14Table 2 : The advantages and disadvantages of Design and Build.....15Table 3 : The advantages and disadvantages of Management Procurement...................................................................16

1

List of FiguresFigure 1 : The fishing port in Vinh Luong Commune...................5Figure 2 : Diagram of EPC...........................................6Figure 3 : The Vinh Luong Fishing port..............................6Figure 4 : The process of the Build-Transfer-Operate contract.......8Figure 5 : The Process of Build-Operate-Transfer....................8Figure 6 : The process of the Design-Build-operate..................9Figure 7 : The used percent of traditional procurement.............13

1

Introduction about Project

The Vinh Luong FishingPort project is in Vinh Luong commune, Nha

TrangCity. This project was built Nha Trang city at first phase in

2006 with 8 billion VND. The port is assigned to PPP and the

Department of Agriculture and Rural Development to manage. However,

the active capacity of port is not enough with the activities of

ships. ‘On the peak, the port welcomed 36 of vessels; catches are more than 150 tons of

seafood. However, the length of pier only is 100 meters, width of 9m, each in turn, the port

can only allow about 10-15 ships dock’. The pollution of fishing port impacts

to environment in activity process. To stop these problems above, the

Nha Trang PPP has decided to upgrade the fishing port. The Department

of Agriculture and Rural Development is owner, the cost is about 25

billion VND (1.2 million USD), and the capital is supported by the

World Bank and the province. (Vietnamplus)

Figure 1: The

fishing port

in Vinh Luong

CommuneSource:

baokhanhhoa

1. Describe the current trends in fishing port project procurement

There are many kinds of current trends in construction industry.

However, for this project we will draw up two main types of current

trends. The first of all current trend is Engineering Procurement

Construction and second is Public Private Partnership.To select the

most suitable procurement method to the Vinh luong fishing Project we

will analyze and evaluate two current trend to give the most suitable

current trend.

1.1 EPC

EPC (engineering procurement construction) contract.

Figure 2: Diagram of EPCSource: Developed for this report

Engineering, Procurement and Construction (EPC) contracts are the most

common form of contract used to undertake construction works by the private

sector on large-scale and complex infrastructure projects such as Dung Quat

Oil Refinery project. In this contract, the main contractor performs all

works of project such as the technical design consultant or construction

drawing; supply of materials and equipment for construction; construction

and handover to client.

EPC Contractor

Engineering Procurement Construction

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1.2 Public Private Partnership (PPP) Current Trend

Figure 3:

The Vinh

Luong

Fishing

port

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Source: Nationaltimes

The Public Private Partnership (PPP) current trend is a business

relationship between private company and government agency for

purpose of completing a project to serve the public. In the PPP

current trend, the private sector is responsible over finance,

design, and building, maintaining, and operating the project which is

traditionally provided by public sector.

Traditional Method: the government borrows money from public or tax.

After that, the government pays to get infrastructure such as roads,

highways…etc. The people are going to use free.

PPP Method: the private companies borrow money to build

infrastructure such as roads, highway, and railways. Then the public

pays the cost to use the infrastructure. When the private company

takes back enough the cost that they used to built, they will

handover the infrastructures to government. After that, the

government stipulates for this project periods of time.

The characteristics of PPP such as an innovated solution for delivery

of public services, the efficiency, quality and management of project

are increased, the risks are transferred to the private company,

especially the value for invested money this mean is the amount of

money is lost as public sector.

Five Main Kinds of Public Private Partnership Current Trend

Design and Build

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The private company designs and builds infrastructure following to

the the public sectors performance specifications. The private

companies are paid by the public sector with a fixed price. The

contract is called as the “turnkey’ contract.

Figure4: ThepartiesandcontractinDesign and Build

Source: Developed for this report

Build and Transfer

The private company designs and builds a project, and then the

project will be given to government. The government will control it.

Build-Transfer-Operate

The private sector designs and builds a project and the project is

transferred to the government. The Government authority controls the

project.

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Figure 4: The process of the Build-Transfer-Operate contract

Source: Developed for this report

Build-Operate-Transfer

The private sector designs and builds a project. The private company

controls the operation of project when the operating contract ends.

Figure 5: The Process of Build-Operate-TransferSource: Developed for this report

Design-Build-Operate

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The project is designed and built by private sector, then the private

sector will operate the project within a lease period.

Figure

6:

The

process of the Design-Build-operateSource: Developed for this report

1.3 Selecting the most suitable current trend for fishing port

In my opinion, for this project the client (Department of

Agricultural and Rural Development) should select the PPP (Public

Private Partnership) current trend and more specific in here that is

Design-Built method. I choose this current trend by some reasons

related to project such as the cost of project has to be prepared

sufficiently from World Bank;the fishing port is still acting daily.

So the project has to be completed in short time as possible.

Especially, the quality will be improved with using this contract

(Vietnam plus, Nationaltimes)

1.4 The hired subcontractor

As we have known, in a construction project has many works undertaken

by many subcontractors such as design, foundation, and concrete

placing subcontractors. In my opinion, the main contractor should

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hire a port design subcontractor. For example, the PORTCOAST

CONSULTANT CORPORATION, which has much experience in port consulting

and designing. The main contractor can use the JCT Nominated

subcontract for the subcontractor (Allan Asworth). With the

contracting the subcontractor, which helps the main contractor deals

with the problem of time of project.

1.5 Conclusion

In summary, for the Vinh Luong fishing port, the PPP (Public Private

Partnership) current trend is the most suitable selection and more

specific that is Design-Build -Transfer. With the current trend that

helps the client and the main contractor for dealing with the problem

of time and the quality of project is also improved.

2. Procurement Issues

2.1 Issues originating from government, professional, trade and

statutory

Latham Report-Constructing the Team:Provide a review of

construction industry. It was jointly commissioned by the

government and industry.

Common set of standard conditions of contract

Employers’ needs must be met industry

Related content: value for money(recommendation of

construction cost should be reduced by 30% but not on

quality)

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Banwell reports of 1960s: to recognize the scope under certain

circumstances for the awarding of contracts without the use of

competitive tendering.

Pressure groups formed to encourage change for their members.

For example, Brish Property Federation

Large employers of industry who have bee able to develop

their own contractual procedures. For example, Department of

transport.

Apparent failure of construction industry to satisfy

perceived needs of tis customers.

Attitudes among the professions

2.2 Recommendation from the sector and government sponsored report.

Modernizing construction (1998); aimed to improve the performance

of construction industry. The report id written in three parts:

the challenge in improving construction industry, improving client

and supplier performance, procuring and managing construction.

Other Reports: The Placing and Management of Building contracts

(1994). Acode of procedure for industry (1893), Think about

building (1985), trust and Money (1993), Constructing the Team

(1994).

2.3 Developments and trends in practice

Trends toward greater efficiency

Employers’ desire for single responsibility

Rabid changes in information technology, both in respect of office

practice and manufacturing process.

Influence educational development and research.

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2.4 Aspect of practice

Client’s main requirements: performance, cost, time.

Major considerations: consultants versus constructors, competition

versus negotiation, measurement versus reimbursement, traditional

versus alternatives.

Current Considerations: fair construction contracts, trust funds,

compulsory competitive tendering, reverse auction tendering,

appointment of specialist firms, quality assurances, latent

defects liability and build assurance, added value, private

finance initiative (PFI), competitive advantage, business process

re-engineering.

Risk analysis and management: identification, analysis,

management, willingness of party to accept risk.

2.5 The Egan reports

‘Rethinking Construction’ was published in July 1998 (Construction

Task Force 1998) and represents the work of a special task force

which was set up by the government to identify the scope for

improving quality and efficiency in construction

The Egan Report undoubtedly recognizes both the good and bad in

construction and seeks to build on those aspects of the industry

which are excellent in a worldwide context. However, on balance,

the conclusion of the report is that the industry as a whole is

underachieving and that there should be radical change in key areas

of its performance. These include quality, productivity, cost and

time certainty, and health and safety.

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The Egan Report identified five key drivers of change needed to set

the agenda for the industry:

(1) Committed leadership

(2) A focus on the customer

(3) Integrated processes and teams

(4) A quality-driven agenda

(5) Commitment to people

Accelerating Change: The report identifies three main drivers to

accelerate change in

construction and introduce a culture of continuous improvement in

the industry:

• The need for client leadership

• The need for integrated teams and supply chains

• The need to address ‘people issues’, especially health and safety

2.6 Procurement issues of this project

Time: the project has to be completed in short time to the local

people can active.

Quality: the client’s required standards of design and workmanship

as expressed in the specification

Cost: the cost of constructing project is not over pass the

estimated budged.

Specifications: the contractor comply with the construction

standards in contract.

Environment: the project reduce the influence to environment such

as water pollution and comply with the standards

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Especially works: demand any the especially works such cold store,

the capacity meets the production of fish catching.

Management issues: the conflicts or disputes alway occur between

the main contractor and sub-contractor or primary contractor and

client.

Safety issues or people issues: the workers and and everyone in

construction site have to be ensured health and safety.

Drawing issues: the drawing of project can exist some errors such

as dimension and construct-ability.

Payment issues: the payment of client to the contractor is late

so the project always is delayed.

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3. Identifying and discussing the international projectProcurement

Procurement method is “the organizational structure adopted by the

client for management of design and construction of a building or

infrastructure project” (Masterman, 1992). There are three main

procurement methods in construction which include Design-Bid-Built

(Traditional Procurement), Design and Built, and Management

Procurement. However, these procurement methods can not apply any

construction project that we have to base on the requirements of

project such as time, cost, quality, and risks. One thing we can not

forget this is the different requirements between the private or

public project.

3.1 Design-Bid-Build (Traditional Method)

Despite procurement trends and fashions, traditional procurement

routes remain popular and, in many cases, the client’s lead

consultant will be an architect/designer. The popularity of

traditional procurement is shown in Figure 7, which indicates a

current market share of 37% based on turnover.

Figure 7:

The used

percent of

traditional

procurement

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Source: WILEY- BLACKWELL (2007)

In the traditional approach, the employer accepts that design work

will generally separate from construction, consultants are appointed

for design and cost control, and the contractor is responsible for

carrying out the works. This responsibility extends to all

workmanship and materials, and includes all work by subcontractors

and suppliers. The contractor is usually appointed by competitive

tendering on complete information, but may if necessary be appointed

earlier by negotiation on the basis of partial or notional

information. The design and construction can run in parallel to a

limited extent. Whilst this allows an early start on site, it also

entails less certainty about cost. There are three types of contract

under the traditional procurement method (Tuner, 1990)

Disadvantages

The pressures may be borne on

the consultant and

construction teams due to

competing (e.g., economy

versus acceptable quality)

The design and construction

phase is separated so the

tendering phase takes up long

time. This cause can affect

to the project through other

factors such as market

opportunities, market risks.

Advantages

Uses competition bidding in the

selection of the consultant and

contractor to improve the

efficiency and quality for

owner.

The tender price is firmly

because the drawing is completed

before the construction phase.

So the cost of project is

calculated firmly based on

details of drawing. The client

budgets known early stage.

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Contractors have no design

input so the contractor can

met difficult in

understanding the

requirements of client.

Design could affect to the

build-ability of the project.

Sometime designer give

drawing with some works that

contractor can not build. For

example, the length of an

arch roof is 5-8m but in

drawing it is 20m. With this

length the contractor can not

perform the arch roof, if

perform it will require the

modern equipment and

construction method, like

this the cost of work will be

undertaken by contractor.

Designers have limited

ability to price build so

could lead to a more

expensive end product

(Turner, 1990)

Drawing is prepared fully before

the tendering phase. So we can

be easy to change the incorrect

or missed items.

The client has control over

design. There is no

responsibility on the contractor

(Turner, 1990)

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Table 1:The advantages and disadvantages of traditional methodSource: (Turner, 1990)

3.2 Design and Build

With design and construct procurement method, a contractor is

responsible for undertaking both the design and construction work on

the projects, and should be expressed in the contract. The extent of

design liability should always set out clearly as possible. The use

of external consultants by contractor must be established before a

tender is accepted. To choose the most suitable contractor,

contractors are required to develop a design (from an initial concept

prepared by the consultant appointed to advice the client) to a

certain level, prepare a tender figure, and submit the whole package

which is termed a proposal to be evaluated to meet the satisfaction

of the client. A team of consultants will be needed to assess each

contractor’s proposal.

The first motivation of Design and Built is the eliminating the

inherent conflicts existing between Architect and contractor. Other

reasons are to greater insurance on completion on time (Tuner, 1990)

Table 2: The advantages and disadvantages of Design and BuildAdvantages Disadvantages Provided that the client’s

requirement are accurately

specified.

The design and

The client’s control over

aspects of project is less

than using other methods

of procurement.

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construction can reduce

the conflicts. The time of

construction is shorter

and project management

efficiency to be improved.

The client only contracts

with one single

organization so the time

and cost of contract are

reduced.

Drawing is less errors and

variations because the

design and construction

can construct parallel

together. If has mistake

it will be resolved

quickly.

The client has difficult

in evaluating the proposal

and tender submission of

contractor has not

experience or lack of

experience in project.

Source: (Turner, 1990).

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3.3 Management Procurement

Several variants of management procurement forms exist, which

include; management contracting, construction management and design

and manage. In this case of procurement of management, the client has

direct contractual relationships with Project Management, Consultant,

and Contractor. Project Management is paid a fee to professionally

manage, develop a programme and coordinate the design and

construction activities, and to convenient collaboration to improve

the project’s construct-ability. However, the power is not to exceed

the authority of client. Project Management is considered as a

managed tool of client.In the case of management contracting, the

contractor has direct contractual links with all the works

contractors and is responsible for all construction work. In

construction management, a contractor is paid a fee to professionally

manage, develop a programme and coordinate the design and

construction activities, and to facilitate collaboration to improve

the project’s construct-ability (Turner, 1990).

Table 3: The advantages and disadvantages of Management Procurement

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Advantages The client deals with only one firm,

which enables improved coordination

and collaboration between designers

and constructors;

Potential for time savings for the

overall project as design and

construction activities are

overlapped

Under a design and manage form, the

contractor assumes risk and

responsibility for the integration of

the design with construction

Works packages can be let competitively

at prices that are current;

Improved construct-ability through

constructor input into the design;

Roles, risks and responsibilities for

all parties are clear

Flexibility for changes in design.

Disadvantages

Informed and proactive

client is required.

Poor price certainty

Close time and information

control required

Client must provide a good

quality brief to the

design team as the design

will not be completed

until resources have been

committed to the project

(Construction management

and management

contracting)

Client loses direct control

of design quality which

is influenced by the

constructors (design and

manage).Source: (Turner, 1990).

3.4 The most suitable procurement method for fishing port

The project is invested by the government so the Design and Build

can not used for this project. If client use this method it will

occur delicate problems in contractual arrangement. So the client

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should select the Design-Bid-Build method, which creates the

transparency in contractual arrangement and the quality of project is

improved better.

3.5 Conclusion

In summary, the traditional procurement method is the most suitable

method for this project.

3.6 Recommendation

In the future, we should need to improve some things in the

procurement methods such as for the traditional procurement. In these

project that demand the short time and high quality. The client

contract directly with contractor and consultant in the same time and

and by competitive tendering. The performance of design and

construction can be parallel together. The client can control over

the project.

4. Analyze the sequence of ‘design and construction’ in Design and

Built

The development of design and build procurement is well documented

(Janssens 1991, Masterman 2002, Morledge et al. 2006, etc.) and has

grown in popularity since the early 1970s to a market share of some

43% (see Figure 7)

In Design and Build procurement method, the client contracts with a

main contractor, who undertakes for both design and construction work

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of project. The main contractor can get subcontracts with the

subcontractors such as consultant and design subcontractors,

suppliers…etc. These subcontractors are controlled directly by the

main contractor.

The major difference is that instead of approaching the designer

for a building, the employer briefs the contractor direct. The

employer may choose retain the services of an architect or quality

surveyor to assess the contractor’s design or monitor the work on

site. The careful employer always wants some form of independent

advice. The client does not order changes during the construction of

the work. If the client wants to get the changes in during

construction period, the contractor requires items such as costs,

time needed.

The design is undertaken by a contractor so this method can save

the construction time and cost, and harmony between the design and

the contractor’s construction capacities. The final building should

result in lower production costs on site and overall shorter design

and construction period, both of which should provide price saving to

the client. A further advantage to the employer is in the implied

warranty of suitability, because the contractor has provided the

design as a part of the all-in service.

Design and Build is a relatively low risk procurement option for the

client, in terms of cost and time. There can be a risk related to

design and quality, particularly if the employer's requirements were

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not properly gathered and if insufficient time went into examining

the contractor's proposal.

(Jctltd; Tunner, 1990; Mortledge, Smith, Kashiwagi, 2006)

5. Describe the roles and responsibilities of parties in

procurement process in the project

The traditional procurement method is chosen for this project so we

will describe the roles and responsibilities of parties in

procurement phase.

Traditional Procurement

The client

Contracts with the consultant and contractor.

Controlling over design, specified quality, requirements and

standards... etc through his appointed consultants

The client reasonable certainty on construction costs, because a

contract figure is usually known at the outset, although this may

need to be adjusted later, as provided for in the contract.

Draw up the penalties in contract.

Consultant

Responsibilities for design, estimating, tender document and

choosing the contractor.

The consultant have to finish drawings before the tendering phase.

Comply with the standards of drawing in contract.

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Review and recommended acceptance of contractor as the drawing and

specifications

Make periodic visits to the site to assure design compliance and

provide certification efforts as required by the permitting

agency.

Contractor

No design responsibilities on the contractor.

The contractor fills the information into tender document and

appointed by competitive tendering.

The contractor has to draw up the completion day within the

requirement of client.

Comply with the construction standards,

Design and Build

The client

The client appoints the contractor

The client’s requirements can range from a simple accommodation

schedule to a fully worked out scheme design, but generally should

be matched by the contractor’s proposals.

The client has control over the design element included as part of

his requirements.has no direct control over the development of the

contractor’s detail design

Decisions or instructions may be required of the client from time

to time, and the client may decide to appoint an agent either to

advise or to act on his behalf.

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In terms of cost and time this is a relatively low risk

procurement option for the client, but there can be uncertainty

over design and quality, particularly if insufficient attention

was paid initially to the preparation of the client’s requirements

and the checking of the contractor’s proposals

The client may take a standard design from a manufacturer,

sometimes called a ‘package deal’, or enter into a turnkey

contract. The client may decide to place the design decision

making with the contractor.

Contractor

Responsibilities

Appoints the consultants and subcontractors

The contractor responsible for any risk in design and construction

phase.

The contractor is responsible for design, and for design

development.

The contractor have to complete the project on time.

Management Procurement

The client

The client will start by appointing consultants to prepare project

drawings, a project specification and a cost plan.

The client retains overall design control through the professional

team.

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The costs can be monitored by the client’s quantity surveyor and

action taken as necessary

The client will need to appoint a contract administrator as part

of the professional team.

The client appoints a design team and enters into an agreement

with the construction manager or appoints an in-house manager. The

construction manager does not directly undertake any of the

construction work,

Consultant

Overall design is the responsibility of the client’s consultants

With management contracts, administrative matters relating to

valuations and payments are in the hands of the client’s

consultants

Contractor

The contractor is responsible both for defining packages of work

and then for managing the carrying out of this work through

separate trades or works contracts.

With ‘design and manage’ procurement, the management contractor

not only assumes responsibility for managing the works packages,

but is also responsible for the design team.

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6. Outline the purposes and activities of client and contractor and

consultant.

For the procurement in construction, the procurement is divided two

phases. The parties involve in two phases included: Client (owner);

Contractor; Consultant (Quantity Surveyor; Engineer, Architect)

Table 4:

Pre-contract activities

Employer’s brief

Investigation

Sketch design

Design

Working drawings

Tender stage

Post-contract activities

Construction

Maintenance

Source: Developed for this report

Table 5: The purposes and activities of organization

Procureme

nt

Process

Client Consultant Contractor

Purposes

Build a fishing port

that meet the

requirements of

province and social

Contract with client and profit.

Provide the best services to client.

Contract with

client and

profit. Create

successful

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such as: cost,

quality, time,

capacity,

environment,

economic

Create a

successful project

and improve

reputation of

company

project .

Activitie

s

Provide the

information of

project to

consultant.

Obtain necessary

legal authority for

this project,

Prepare the tender

document for

consultant. Invite,

negotiate, and

contract with a

consultant company.

Provide information

of project to

consultant such as:

size, capacity,

scope, cost...etc.

Negotiate and

contract with

client. Consult

the client about

the project such

as size, cost,

quality, law.

Prepare drawings

and

specifications.

Estimating the

cost of project.

Make a tender

document and

select the most

suitable

contractor to the

project.

Negotiate the main

Negotiate the

consultant the

conditions in

contract. Carry

out the works.

Coordinate the

subcontractors

on site.

Draw up the

warranty or

maintenance for

the project.

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Prepare the

legislations relates

to the project .

Inspect the

implementation of

contract for design

Pay the cost for

designing and

constructing work.

contractor about

the conditions and

cost in contract.

Supervise the work

of contractor for

complying with the

terms in contract.

Source: (Allan Ashworth)

7. Analyze contractual arrangement used with subcontractor

Subcontractor is a person who is contracted with a contractor to

provide some works of project which the contractor has agreed to

perform.

7.1 Nominated Subcontract

A subcontractor chosen by the architect or engineer to carry out

specialist work. Appointed on the expenditure of a provisional sum or

prime cost sum included in the contract bills. The nominated

subcontractor enters into a contract with the main contractor but

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there may be a collateral warranty between the nominated

subcontractor and the client.

7.1.1 Intentions of Parties

The Subcontract

The subcontractor should write to the contractor specifying the

discrepancy to the engineer. The subcontractor may be required to

enter into the subcontract. The subcontractor’s liability will not be

expected to exceed the term of subcontract.

Execution of the subcontract works

Subcontractor’s obligations are carry out and complete any works in

compliance with the subcontract document. The subcontractor indemnify

the contractor with reasons such as omission of work, non-

performance...etc.

Strikes

The subcontract works may be effected by a local combination of

workers, strike in any capacity with the project. The contractor

will ensure that the site is kept open for a subcontractor and

subcontractor take all reasonable steps to continue work.

Subcontractor’s liability under provisions of main contract

A subcontractor must also observe, perform and comply with the

provisions of the main contract, where these relate to the

subcontract works.

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7.1.2 Commencement and completion

Subcontract Obligation

The subcontractor starts works on site in accordance with main

contract works. The main contractor give the sufficient information

on progress of the works to the subcontractor.

Delays and extension of time

The subcontractor notify the contractor in writing of the

circumstances causing the delay. The contractor then informs the

engineer. If a subcontractor do not accept the extension of time,

the main contractor may be invited to join a subcontractor in

arbitration.

The subcontractor fails to complete the works in time they can pay

any loss and damage.

Practical completion of the subcontract

When complete the works the subcontract give a written to the main

contract and a copy to the engineer. The subcontractors similarly

liable for defects in their work which occur before the end of

defects liability period before the expiry of the main contract.

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Main contract conditions with sectional completion supplement

The main contract conditions provide for sectional completion of the

works.

7.1.3 Control of The Works

Instructions of the architect and directions from the contractor

The subcontractor is imposed by the information contained in the

subcontract document. The subcontractor should keep on the site a

competent person to whom the engineer, can issue instruction.

The contractor must pass on such instructions efficiently in order to

avoid the possibility of misunderstanding. The subcontractor comply

with the instructions, unless they make a reasonable written

objection to their compliance.

Subcontract’s quotation

In the same way that the amin contractor may be asked to provide a

quotation against a variation instruction, so might a nominated

subcontractor. Such as adjustment to the time for the completion of

the subcontract works...etc.

Work not in accordance with the subcontract

If the subcontractor can be given the instruction to remove the work

if any works are not accordance with the contract. The substandard

works can be accepted and appropriate deduction made from the

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contract sum. The subcontractor is to indemnify any loss from non-

compliance. ]

Subcontractor’s failure to comply with directions

If the subcontractor fails to comply the engineer’s instruction

within seven days, the engineer employ others to comply the

direction.

Engineer’s instructions- statement of authority

Subcontractor are able to object to engineer’s instructions if the

engineer is exceeding the power granted under term of contract.

Right access of contractor and engineer

Both engineer and contractor have to get reasonable access to the

workshops of a subcontractor.

Assignment and subletting

A subcontractor must not assign or sublet any part of subcontract

works without the engineer’s written consent.

Contractor and subcontractor not to make a wrongful use

The main contractor and subcontractor should not make wrong use with

the property of others working on site. Such as theft of materials,

plant, equipment...etc.

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7.1.4 Payment

Provisions of payment

Actual price paid by the contractor to the subcontractor.

A cash discount payable to the contractor.

Any charges in the bill of quantities.

A profit percentage

Interim Payment

The valuation, invoices must be made available for inspection by

the quality surveyor.

The rates, prices and arithmetic should be checked and ensure that

the quantity of work has been properly executed.

Any doubts , the matter should be brought to attention of engineer

The approved invoices are then included in quality surveyor’s

evaluation of the work.

The engineer inform the contractor of the amount that has been

included for each nominated subcontractor

Direct Payment

The contractor must provide some evidence that the appropriate

amounts shown on previous certificates have been paid.

The absence of this evidence will mot automatically assume that

the subcontractor has not been paid, but before proceeding to

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issue another certificate the engineer must be reasonable

satisfied that is not the case.

The form of the contract provides a remedy for paying a

subcontractor direct, in those case where the main contractor

defaults in payments.

7.1.5 Statutory Obligations

Value added tax

The exclusive od value added tax is provided for the subcontract sum.

This is to be paid as an extra to the subcontract. Main contractor

will turn recovery any tax that have to bay as an input tax.

Construction (Design and Management) Regulations 1994 (5E)

The subcontractor comply with the health and safety plan and the

maintenance of a health and safety file.

7.1.6 Injury, Damage and Insurance

Injury to persons and property

A subcontractor is responsible for injury that mat caused to persons

or property due to the negligent carrying out the subcontract works.

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Insurance against injury to persons and property

The subcontractor is responsible for maintaining such insurances that

are necessary to cover liability in respect of personal injury, death

or damage to property that might be caused while carrying out the

subcontract works.

A subcontractor is not liable to indemnify the contractor in respect

of personal injury by the effect of an excepted risk.

Loss or damage to the works

The subcontractor is not responsible for any loss or damage that

occurs due to the occurrence of one of the specified perils.

Subcontractor are of course responsible for any loss and damage

caused by their own workers. The subcontractor must inform the main

contractor in writing of the extent, nature and location of the

damage.

Subcontractor’s plant, default by subcontractor and joint fire

code

Any properties brought on site by the nominated subcontractor are

the sole risk ans responsibility of the subcontractor.

The subcontractor fails to properly insure, the other party may do

this on their behalf. The amounts of the premiums are recovered from

the party who is in default.

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All subcontractor must comply with joint fire code and should ensure

compliance by any person for whom a subcontractor is responsible

under terms of contract.

7.1.7 Determination

Determination of employment of the subcontractor by the contractor

The main contractor may request the engineer, if a nominated

subcontractor defaults with the reasons such as suspending the

works, failing to proceed with subcontract works...etc.

The contractor informs the engineer about the default of

subcontractor. The subcontractor has 14 days for remeding the

default.

If a subcontractor employed, even without knowledges or inducement

in relation to execution of work then the engineer may terminated

the subcontract.

The engineer may appoint an other subcontractor.

The duties of main contractor and subcontractor when the

subcontract has been terminated:

- The appointed subcontractor may be used freely the equipment of

subcontractor.

- Not any payment for the subcontractor

- The contractor may be directed by the engineer for any good and

materials on site.

- The contractor may remove and sell the properties of

subcontractor if they do not remove.

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- The subcontractor pay any loss and damage for the main

contractor from determination.

Determination of employment under the subcontract by the

subcontractor

If the main contractor makes a default such as suspending work

before completion then the subcontractor can determine the works.

The subcontractor make a written notice about default, sent a copy

to the engineer. After 14 days without remeding of contractor, the

employment of subcontractor can be terminated.

The subcontractor remove their properties on site for preventing

injury, death or damage.

The contractor must then bay to the subcontractor such as total

value of work completed at the date of determination, the cost of

removing, any direct loss caused by determination...etc.

Determination of contractor’s employment under the main contract.

If the main contractor id terminated then every nominated

subcontractor is also determined. The subcontractors have suffered

direct loss and expense.

7.1.9 Adjudication, Arbitration and Legal proceeding

Any dispute or difference between the Contractor and the Sub-

Contractor as to any matter arising under or out of or in

connection with the Sub-Contract or the Sub-Contract Works or as

to any certificate, decision or instruction by the Superintending

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Officer shall be referred to and finally resolved by arbitration

in Singapore

Provided that if the dispute or difference concerns the

termination of the employment of the Sub-Contractor or the

repudiation or abandonment of the Sub-Contract by either party

such dispute or difference may be referred to arbitration at any

time after such termination or repudiation or abandonment.

If necessary in place of an arbitrator already appointed under the

Sub-Contract, whose authority shall, to the extent of any such

common dispute only, be deemed to have been revoked upon any such

new appointment of a common arbitrator.

7.2 Domestic Subcontractor

A subcontractor chosen and engaged directly by the main contractor to

carry out a particular work. May be labor-only or supply and fix.

Examples – groundwork, brickwork, roof tiling, plastering. Usually

appointed under a standard form of contract or using the main

contractor’s bespoke conditions. Under JCT 05 Standard Building

Contracts, the contractor requires the architect’s approval to sublet

any part of the works but approval of particular subcontractors is

not required

The ICE Conditions require the contractor to notify the engineer of

the extent of work to be subcontracted and the names and addresses of

each subcontractor. The engineer may object to the employment of any

subcontractor (Wiley Blackwell)

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7.2.1 Contractual Arrangement

Article1: The subcontractor’s obligations are similar with the

provisions in the amin contract and the overall aims and

objectives of the employer. The subcontractor will, however, only

be bound by those contract conditions that are written into the

subcontract agreement.

Article 2: The subcontract price is to be exclusive of VAT, in

line with the main contract conditions. If the work is to be

remeasured, the subcontractor’s tender sum will be inserted into

conditions.

Article 3: Settle of disputes, and requirement that all matters

will be first referred to adjudication, then arbitration and

finally to the courts if the dispute cannot be settled.

These follow a similar pattern and content to the nominated

subcontract conditions. However, the domestic subcontractor is not

recognised in the same way by the employer as nominated

subcontractor.

Advantages: There are direct payment provisions by by employer

should the main contractor default in paying a domestic

subcontractor. Neither is there any provision for a early release

of retention.

If the subcontractor does not accept any unfair treatment from the

amin contractor, the engineer can help to settle the disputes.

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The domestic subcontractor must comply with all instructions, make

good any defective work and allow access for the architect to

workshops if this is required.

Failure to complete works: The contractor must inform the engineer

of this event. A certificate will be sent and forwarded to

subcontractor concerned.

Practical completion: A certificate should be sent to the

contractor and a duplicate copy to subcontractor .

Defects after final payment: Employer (or the contractor) will

take the necessary steps to recover the amounts for remedial work.

Renomination of a nominated subcontractor is necessary in specific

cases stated in the contract

7.3 The proposed subcontractor for fishing port.

In this project, the client undertakes directly both design and

construction work. So the named subcontract and domestic

subcontractor are not employed because they are only contracted by

the main contractor. For this project, the client should employ the

nominated the subcontractor by the subcontract. Because the

provisions of the nominated subcontract has firmly binding for client

and nominated subcontractor. In summarize, the nominated

subcontractor is the most suitable subcontractor for this project.

8. Evaluate the types of contractual arrangement used with

supplier.

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8.1 Contractual Arrangement

Materials:

Raw materials (cement, brick, timber, etc.)

Often represent the largest expense on the construction site.

Trend: manufactured off-site for on-site assembly, will help to

diminish value of this section.

Components:

Delivered to site in almost “kit” form.

Trend: industrialization (off-site manufactured delivered to site

to assembled easily on-site.

Disadvantage: cost of off-site manufacture may be more expensive.

Goods:

Standard nature, is purchased directly from a catalogue (sanitary

ware, electrical fittings, etc.)

Suppliers are chosen based on quality and performance.

In other circumstances, specialist local suppliers will be used

Disadvantages: the quality of goods is not truly for real.

Bulk purchase: arrange a large order or agreement with suppliers.

Helps to reduce costs of materials, components and goods

Subcontractor (nominated one) may be those who “supply and fix

material” or “supply materials only and be fixed on site by

contractor” .

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Specification in contract document: may identify particular

suppliers to provide materials, components and goods.

Consider a list of alternative suppliers or using the term “other

equal and approved” .

8.2 The contractual arrangement applied for this project

In the construction process, the fishing port requires the big and

long beams. The constructing them is difficult on site and more

risks. So the type of contractual arrangement that client applies for

this project is component. With this contractual arrangement the

contractor or client can reduce the risks in construction process and

achieved a high quality. Although the cost of components are

expensive, but we should compare the cost of installing on site which

can be higher than the cost of fabricated components if installing

occurs risk, accidents.

8.3 The self-evaluation for limitations

In the contractual arrangement of supplier, I have not drawn up the

specifications of payment and settlement of disputes. Such as the

main contractor must pay the required amount within 30 days of the

end of the month during which delivery is made, if any disputes

arises between the supplier and the contractor they must first agree

to take their different to arbitration. We should add the payment and

settlement of disputes in contractual arrangement.

Reference

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Osborne s. B. (Ed) 2000, ‘Public Private Partnerships: Theory and Practice in

International Perpective’ Roultledge

Mortledge, R., Smith, A., Kashiwagi, D.T. (2006). ‘Building Procurement’.

Blackwell, Oxford, UK.

Turner, A. (1990).‘Building Procurement’.Macmillan, UK

Walker, D., Sidwell, A. & Hampson, K. (1999),‘Project Procurement and

Alliances - A Continuum of Competition to Cooperation’, RMIT, Melbourne

Love, P.E.D., Skitmore, R.M., and Earl, G. (1998).Selecting a suitable

procurement method for a building project. Construction Management and

Economics

Akintoye A and Fitzgerald E (1993) “Design and Build: A Survey of

Architects' Views.” Engineering Construction and Architectural Management.

Construction Task Force (1998), ‘Rethinking Construction’. Department of

Trade and Industry

Latham, M., Sir (1994), ‘Constructing the Team’. HMSO

Strategic Forum for Construction (2002), ‘Accelerating Change’. Rethinking

Construction.

John Wiley- Blackwell. (2007), ‘Construction Planning, Programming and

Control’. 3Ed, Viewed on 10/07. Unit Kingdom.

https://bib.irb.hr/datoteka/362416.65-Turina_Radujkovic_Car-Pusic.pdf

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Tien Minh, 2013, ‘Đầu tư 1,2 triệu USD nâng cấp cảng cá Vĩnh Lương’, Vietnamplus, viewed on June 1, 2014, <http://www.vietnamplus.vn/dau-tu-12-trieu-usd-nang-cap-cang-ca-vinh-luong/183026.vnp>

‘Vinh Luong fishing port busy good with harvest’,Baokhanhhoa, viewed on June 5, 2014, <http://www.baokhanhhoa.com.vn/english/photo/201311/vinh-luong-fishing-port-busy-with-good-harvest-2278456/>

‘World Bank supplies $2.2mn to upgrade fishing port in Vietnam’,Nationaltim, viewed on June, 2014, <http://www.nationaltimes.vn/economic-news/world-bank-supplies-22mn-to-upgrade-fishing-port-in-vietnam-124428.html>

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