Risk management: Risk of interpreting and clarifying contract documents (Essay Sample)

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Risk management
Risk of interpreting and clarifying contract documents
Cases of ambiguity lead to cases where the person interpreting the contract has to choose between the different choices he/she has. The choice made by the person may not necessarily be what the person who drafted the contract intended to mean. Moreover, an ambiguous contract can be easily manipulated by either party to suit their own needs at the expense of the other party.
General and special liability risks associated with the project
* Market conditions- they include costs that relate to a change in market prices, mainly due to a shift in the demand-supply curves.
* Labor availability- readily available workforce is strength for the firm. However, a lack of sufficient labor force leads to a high wage bill.
* Site conditions- when the site intended for the project is different from what is planned for, either geographically or physically, more funds are needed to make it suitable through rehabilitation
Risks associated with the project costs
They can be categorized into three:
* Performance and quality scope- risks that arise when he project fails to perform as expected or failed to meet certain criteria. These risks lead to cost and schedule risks. The contract document should include a clause that places the costs on the contractor if the intended quality is not met.
* Environmental and health risks- The risks have a major effect on the environment and hidden damages that was not planned for initially. Grave incidents lead to a rise in schedule and costs. Before the cost estimation is done, costs that are related to the environment, including licensing and any damages, should be analyzed and taken into consideration.
* Schedule risks- they arise when the project takes longer than expected. The prolonged duration leads to a rise in costs.
Risks arising from substitutions, change orders and submittals
Cost risks- a change in orders can lead to increase in cost in places where the previous demands are overlooked favoring new supply materials.
Breach of contract-a change in the order and submittals is breach of contract by the owner himself.
Substitutions can lead to a compromised quality of the project. The quality is affected when the intended materials that were taken into consideration substitute for new materials. The contractor is then forced to fit in the new demands
Safety
Pre-qualification procedure for subcontractors which considers their EMR
1 Has your firm been warned or cited for any violations of health or safety regulations by CAL OSHA in the last three years?
2 Has the firm been cited or penalized by the Occupational Safety and health administration in the last three years?
3 What duration does the firm take before safety meetings for the construction employees and supervisors are held during the course of a project?
4 List the firms EMR for the last three years.
Contract Administration
Procedures for submittals, change orders, and claims
* Submit the work description that is reflected as beyond the contract’s scope. There should adequate time for review for all parties involved. Failure to give enough documentation that satisfies the reason leads refusal of the request.
* The contractor should give a written notice of his/her intention to ask for extra time or cost.
* Name the person who is authorized to accept the changes.
* Maintain detailed records of the work performed.
* Document every quotation that covers every itemized item.
Procedures for punch lists and inspections
* The project engineer shall inform the contractor that it is his duty to inform the engineer when the project is complete and that it should be inspected for verification.
* When the project engineer receives the notification of a request of a final inspection project, he/she should notify the district field engineer of the inspection date. The project engineer and the district engineer will then review the project and all the recommendations and compile them into the punch-list.
On completion of the items, the engineer shall inform the field engineer that the project was completed satisfactorily.
Sample bid package for Concrete.
Invitation to bid
HARD WORK ENGINEERING SERVICES invites bids on concrete supply for the TIMES TOWER EXPANSION PROJECT. All bids should not be later than 3.00pm local time July 16, 2014. The bids should be on the bid forms that are provided in the bid package. He contractor should be insured and a performance bond required.
The bid form is indicated below
Item

Bid item

Quantity

Unit price

Total

1

Concrete sidewalk per COP Det P1230




2

Concrete Valley Gutter per MAG Det 240




All prices should be inclusive of tax.
Project acceptance and close out procedures
Requirement for substantial completion- the project should complete by the contractor
Release of retainage-any retainage should be released and any reduction in the amount is the discretion of the proprietor.
Requirements for final acceptance- final documents should be prepared, including the draft for final payment, a copy of the punch-list and a completed closeout guide.
Availability of records submittals-all copies of approved submittals should be submitted to the project engineer
Availability of operating and maintenance guides
Project cleaning- the contractor shall ensure the project site is clean and in an orderly condition when handing it over.
Commissioning process
* Develop commissioning objectives which lay out the commissioning process.
* Finalize the commission plan
* Create and incorporate the commissioning specifications into the bid docume...