Overview of EPC Contracts and Clauses

of Contract Agreement

S.K. Nirmal
Secretary General, Indian Roads Congress
Director General (Road Dev) & Special Secretary (Retd)
 Types of Contract in Road Projects
• Item Rate Contract
• EPC Contract
• Build Operate & Transfer Contract:
BoT (Toll)
BoT (Annuty)
Hybrid Annuity Mode

Authority/Employer’s ultimate objective in any type of contracting

format: Value for Money by way of Time, Cost, Quality,
Performance etc.
 General Characteristics of EPC Contract

• EPC is a particular form of contracting arrangement where the EPC

Contractor is made responsible for all the activities from design,
procurement, construction, commissioning and handover to the
client/authority at an agreed price at a fixed date.
• Performance standards of the product is also hallmark of EPC
Contract.
• EPC Contract incentivizes innovation and best practices
• Improved risk management
• Contractor’s focus to provide minimum compliant design is cause of
worry
Chronology of Development of MoRT&H EPC
Document
• Structured on international best practices and customised for
Indian requirements
• Model EPC document for construction of two lane NH projects
was developed/approved in August 2012
• Several amendments have been carried out from time to time
based on feedback from stakeholders
• Modified standard EPC agreement for National Highways and
centrally sponsored road works was issued in January 2017,
November 2018, March 2019, Dec 2022, 2023 and 2024.
 EPC v/s. Turn Key Contract
• EPC and Turn Key appears to be same but there are some
differences between two concepts as follows;
In EPC, employer (Authority) will provide basic engineering to a
contractor and the latter shall perform detailed design based on
received basic design.
In Turnkey, employer (Authority) will only provide certain
technical specifications of the project and it is the responsibility
of the contractor to prepare basic and detail design of the
project.
In Turnkey, the contractor is responsible to perform construction
and commissioning, start-up and take over of the plant to an
employer, but in EPC, it may be the responsibility of another third
person to do commissioning and start-up.
 Structure of Model EPC Agreement
• Six Parts (contains 28 Articles):
Part I: Preliminary
Part II: Scope of Project
Part III: Construction and Maintenance
Part IV: Financial Covenants
Part V: Force Majeure and Termination
Part VI: Other Provisions
• Sixteen Schedules:
Schedule A: Site of the Project
Schedule B: Development of the Project highway
Schedule C: Project facilities
 Structure of Model EPC Agreement contd…..

Schedule D: Specifications and Standards

Schedule E: Maintenance Requirements
Schedule F: Applicable Permits
Schedule G: Form of Bank Guarantees
Schedule H: Contract Price Weightages
Schedule I: Drawings
Schedule J: Project Completion Schedule
Schedule K: Tests on Completion
Schedule L: Completion Certificate
Schedule M: Payment Reduction for Non-Compliance
Schedule N: Selection of Authority’s Engineer
Schedule O: Forms of Payment Statements
Schedule P: Insurance
Schedule Q: Tests on Completion of Maintenance Period
Schedule R: Taking over Certificate
 Relationship with IRC Manual
• Schedule D of the EPC Contract document has following
provision:
Project Highway including Project Facilities shall conform to
design requirements set out in applicable Manual (Manual of
specifications and standards for two/ four/ six laning of
highways)
Manual of Specification and Standards for two laning IRC:SP:73
Manual of Specification and Standards for Four laning IRC:SP:84
Manual of Specification and Standards for Six laning IRC:SP:87

 Indian Roads Congress codes, standards, guidelines and any other

code/standards specifically mentioned in Manual shall be
applicable for design
Deviation list
 Brackets, Asterisks & Foot Notes

• Provision in Curly Bracket {} e.g. Definition of Project Highway: To

be retained in RFP but to be modified in Agreement
• Provision in Square Bracket [] e.g. Schedule Completion Date in
Clause 10.3(i) : To be suitably filled/modified in RFP
• Asterisks *to be substituted by project specific details in RFP
e.g. specific chainage of project to be filled up in recital B
• Serially numbered footnotes for guidance and to be deleted from
RFP
• Footnotes marked “$” to be retained in draft agreement e.g.
validity period in Form of Bank Guarantee for Performance
Security (Schedule G)
Definition, Interpretation, Priority of Documents
“Applicable Laws” means all laws, brought into force and
effect by the GOI or the State Government including rules,
regulations and notifications made thereunder, and
judgements, decrees, injunctions, writs and orders of any
court of record, as may be in force and effect during the
subsistence of this Agreement.
“Applicable Permits” means all clearances, licences, permits,
authorisations, no objection certificates, consents, approvals
and exemptions required to be obtained or maintained under
Applicable Laws in connection with the construction,
operation and maintenance of the Project Highway during
the subsistence of this Agreement;
“Base Date” means the last date of the calendar month,
which precedes the Bid Due Date by at least 28 days.
 Definition, Interpretation, Priority of Documents
contd…..

“Base Rate” means the floor rate of interest announced by the State Bank
of India for all its lending operations.
“Change in Law” means the occurrence of any of the following after the
Base Date:
(a) the enactment of any new Indian law;
(b) the repeal, modification or re-enactment of any existing Indian law;
(c) the commencement of any Indian law which has not come into effect until
the Base Date; or
(d) a change in the interpretation or application of any Indian law by a
judgement of a court of record which has become final, conclusive and
binding, as compared to such interpretation or application by a court of
record prior to the Base Date.
 Definition, Interpretation, Priority of Documents
contd…..

“Contract Price” is the amount quoted by the selected bidder and

accepted by the Authority. It includes all duties, taxes, royalty, cess,
charges, and fees applicable as on Base Date. It does not include
maintenance cost. Contract Price shall be adjusted for increase and
decrease in rates and prices of labour, cement, steel, plant, machinery
and spare, bitumen, fuel and lubricants and other materials. Contract
Price shall also be modified to take into account change in law.
“Defect” means any defect or deficiency in Construction of the Works
or any part thereof, which does not conform with the Specifications
and Standards, and in the case of Maintenance, means any Defect or
deficiency which is specified in Schedule-E.
Definition, Interpretation, Priority of Documents
contd…..

• All measurements and calculations shall be in the metric system

and calculations done to 2 (two) decimal places, with the third
digit of 5 (five) or above being rounded up and below 5 (five)
being rounded down.

• Priority of agreements:
Agreement
All other agreements and documents forming part of contract
In case of discrepancies within the Agreement, following will
prevail:
Between 2 or more clauses, the clause relevant to issue
Definition, Interpretation, Priority of Documents
contd…..

Between clause of agreement and schedule, the clause

Between schedule and annex, schedule
Between any 2 schedules, schedule relevant to issue
Between written description on drawings and specifications/
standards, the later
Between dimension scaled from drawing and written value, the
later
Between any value written in numerals and words, the later
 MANUALS

 Manual of Specifications and Standards For Two

Lanning of highways with Paved Shoulder – IRC-SP-73-
2018
 Manual of Specifications and Standards For Four
Lanning of Highways – IRC-SP-84-2019
 Manual of Specifications and Standards For Six
Lanning of Highways – IRC-SP-87-2019
 Necessity of Manual contd..

 Schedule D, Annex- I mentions that a copy of the Manual of

Specifications and Standards published by the Authority/
MORTH to be provided to the concessionaire/ Contractor as
part of the bid documents.
 Design Standards
 Specifications and Standards
 Any deviations from Specifications and Standards
 Necessity of Manual (cont)
 Contractor to comply specifications and standards set forth in Annex-I of
schedule – D for project construction
 Project Highway and Project facilities to confirm design requirements set
out in the MANUAL : IRC - SP :73/84/87 (THE MANUAL) , relevant
Specifications and Standards
 All materials ,works and construction operations to confirm the Manual
and MORTH Specifications for Road & Bridge
 Deviations from above referred Specifications and Standards to be listed
out in Annex- I of Schedule – D to meet out the specific require of the
Highway Project
 Scope of the Project

• Construction of Project Highway on Site set forth in Schedule A, as

specified in Schedule B together with Project Facilities in Schedule C in
conformity with Specifications & Standards set forth in Schedule D
• Maintenance in conformity with Schedule E
• Schedule B & C should be drafted in such a way that there is complete
harmony with Manual referred to Schedule D and Plan & Profile provided
at Annex III to Schedule A and free from any inconsistency/ambiguity.
Additional details may be provided in Schedule A, B & C if considered
necessary.
• Four important requirements of Schedule A, B & C: Clarity, Consistency,
Completeness & Correctness
 Obligations of the Parties
• Authority Obligations:
Correctness of Scope of the Project, Project Facilities, Specifications
and Standards and criteria for testing of completed works.
Handing over of Site free from encumbrances in 90% length of the
Project Highway within 30 days from the date of signing of Agreement
(sum total of parcels in not less than 5 km length) and remaining 10%
within 150 days from Appointed Date as per the schedule given in
Schedule A
Approval of GAD from Railways within 60 days from Appointed Date
and re-imbursement of all costs paid by the Contractor to the Railways
Environmental clearances before issue of LoA.
Reasonable assistance to Contractor in procuring applicable permits,
access to water, electricity etc., visa for expatriate personnel of
Contractor etc.
 Obligations of the Parties contd……

No barriers on project highway by any government

instrumentality that would have material adverse effect on the
works except for reasons of emergency, national security, law and
order or collection of taxes
Not to do anything violative of provisions of Agreement
Maintenance obligations prior to Appointed Date so that traffic
worthiness and safety of Project Highway are at no time
materially inferior as compared to its condition 10 (ten) days
prior to the last date for submission of the Bid
 Obligations of the Parties contd……

• Contractor Obligations:
Survey, investigation, design, engineering, procurement, construction,
quality assurance, quality control and maintenance of Project Highway
Compliance to applicable laws and applicable permits
Procure appropriate proprietary rights, licenses, agreements including
those of sub-contractors
Remedy loss, defects or damages to Project Highway from Appointed
Date till completion of Defects Liability Period.
Not to do anything violative of provisions of Agreement
Compliance to labour laws
Traffic safety and work zone safety by self and Sub-contractors
 Obligations of the Parties contd……

Obligations wrt sub-Contracting:

 Execution of minimum 51% of Contract Price
 Split above works to not more than 5 sections
 Approval of individual sub-Contractors if value of works in respect of such
sub-Contractors is more than 5% of Contract Price
 Sub-Contractor is required to execute a single work not less than 40% of
value of sub-contracted work in preceding 3 years.
Grant of employment/ residential visa and works permit for foreign nationals
Qualification, skill and experience of personnel for effective
superintendence of works from planning to testing
Hiring of at least 10% trained work men as per National Skills Qualifications
Framework
Eviction of unsuitable personnel from Site within 10 days of necessary
direction from AE
 Performance Security
• Contractor to submit BG towards Performance Security
equivalent to 5% of Contract Price within 30 days from issue of
LoA.
• Additional Performance Security for under priced bid
• Performance Security shall be valid upto 60 days after Defects
Liability Period whereas Additional Performance Security shall be
valid upto 28 days after Project Completion Date
• Selected Bidder has option to submit 50% of Performance
Security & Additional Performance Security within 30 days from
LoA and balance 50% within 30 days of signing of Agreement
• Upfront Damages to be paid by Contractor @0.01% of the Bid
Price for each day delay in submission of Performance Security
including Additional Performance Security upto 60 days period.
 Performance Security contd……
• Failure to submit Performance Security and Additional Performance
Security within additional 60 days time period by Contractor will lead to
deemed cancellation/ withdrawal of award and forfeiture of Bid
Security.
• Contractor has option to submit BG initially for 2 years validity period
and extend 2 months prior to expiry.
• Contractor’s obligations for replenishment/fresh submission of
Performance Security within 30 days against part or full encashment
and appropriation by Authority as Damages for Contractor Default
failing which Authority may terminate Contract.
• Authority to return Performance Security within 60 days of the expiry
of Maintenance Period or Defects Liability Period whichever it later.
• Authority to return Additional Performance Security within 28 days
from the date of issue of Completion Certificate
 Site & Encumbrances thereon Contd……

• Authority will pay Damages to the Contractor for delay in handing

over of Site calculated by the following formula:
Amount of Damages in Rs. per day per metre = 0.05 x C x 1/Lx 1/N
Damages restricted only in respect of Construction Zone
• Aggregate Damages payable Authority shall not exceed 1% of
Contract Price.
• Contractor entitled to Extension of Time for delay in Site
handing over apart from Damages (only with respect to such
affected parts of Site) but overlapping delays if any shall not be
additive.
• Authority may withdraw any works not exceeding an aggregated
value equal to 10% of Contract Price excluding the works in
municipal limits, calculated in accordance with Schedule H.
 Site & Encumbrances thereon Contd……

• Contract Price to be reduced by 90% of the value of the works withdrawn,

no other claims by Contractor admissible.
• If any work is withdrawn after commencement of construction, Authority
to pay Contractor 110% of the fair value of works done as assessed by
Authority’s Engineer
• Works within municipal limits shall be deemed to be withdrawn if site for
such works is not handed over within 180 days from the Appointed Date.
Such works shall not be computed for the above 10% ceiling
• Site to be made available by the Authority to the Contractor free from all
Encumbrances and occupations.
• Contractor to ensure that no encroachment takes place and remove any
encroachment that may take place within construction period.
 Site & Encumbrances thereon Contd……

• Contractor is responsible for shifting of utilities, felling of trees and

dismantling of structures.
• Contractor will be reimbursed the cost of utility shifting and tree felling.
• Contractor can carry out utility shifting, tree felling etc. within the
Development Period.
• Contractor to dismantle structures on acquired lands at its own cost and
dispose off the debris as per EMP.
• No EoT to Contractor for delay in shifting of utilities and felling of trees on
its own account.
• In case of delay in dismantling of structures on acquired land for reasons not
attributable to the Contractor, Contractor is entitled to EOT.
• Although, Contractor can execute pre-construction activities during
Development Period, no claim against Authority for delay during this period
will survive.
 Appointed Date
• Appointed Date is the project commencement date declared by
the Authority
• Conditions to be fulfilled before declaration of Appointed Date:
Contractor: Submission of Performance Security and Additional
Performance Security, if required
Authority: Handing over of Site in not less than 90% length of
the Project Highway
• Deemed termination of Contract if Appointed Date does not
occur within 90 days of signing of agreement and submission of
full performance security by Contractor
Damages payable to the Contractor 1% of Contract Price (3% in
case of stand alone bridge project)
 Authority’s Engineer
• The officer in-charge of the Authority (e.g. PD/ RO/ CGM/ Member in the
case of NHAI; RO/CE/ADG in the case of MoRTH projects executed through
the State PWDS is responsible for the overall supervision and monitoring of
the execution of Project.
• Authority shall appoint a firm of consulting engineers or a project monitoring
committee as Authority’s Engineer within 10 days from the date of
Agreement or before declaration of Appointed Date whichever is earlier
following open bidding using model RFP of MoRTH.
• Authority may appoint an officer to act as Authority’s Engineer till such time
a consulting firm is appointed as Authority’s Engineer.
• The remuneration, costs and expenses of Authority’s Engineer shall be paid
by the Authority.
• Terms of Reference of Authority’s Engineer given in Schedule N.
 Design & Development of Project Highway

• Contractor shall appoint a Design Director within 20 days from

the Appointed Date.
• The Contractor shall appoint a Safety Consultant to carry out
design stage safety audit with prior consent of Authority (for the
consultant as well as its key personnel).
• The Contractor shall appoint a Proof Consultant with prior
consent of Authority who will proof check the detail calculations,
drawings and designs.
• Within 30 days from the Appointed Date, the Contractor shall
submit to the Authority and Authority’s Engineer work
programme.
 Design & Development of Project Highway
Contd….
AE will approve/give observations on drawings within 15 days (30 days for major
bridge/structure). AE will approve revised drawings within 10 days.
• Contractor responsible to get all drawings approved from AE within 90 days from
Appointed Date.
• If recommendation of Safety Consultant requires any work beyond Scope in
Schedule B or C or design standards beyond Schedule D, Contractor will seek
instructions from Authority for CoS.
• Work shall be executed as per approved drawings. No drawing shall be
altered/amended without prior approval of AE.
• Notwithstanding review/approval by Authority’s Engineer or failure to do so,
Contractor shall remain sole responsible for correctness for design and drawings.
• Contractor will compute length/area/number of different stages of items shown in
Schedule H based on drawings developed. Such quantities will form basis for interim
payment.
 Construction of Project Highway
 Contractor shall construct the project highway as specified in Schedule- B and
Schedule-C, and in conformity with the Specifications and Standards set forth in
Schedule-D following the Project Completion Schedule set forth in Schedule J.
• Project Completion Schedule has following milestones:
Project Milestone I – [35%] of the Schedule construction period, submission of
Stage Payment Statements for amount not less than 10% of Contract Price.
Project Milestone II – [60%] of the Schedule construction period, submission of
Stage Payment Statements for amount not less than 35% of Contract Price and
start of construction of all bridges.
Project Milestone III – [85%] of the Schedule construction period, submission of
Stage Payment Statements for amount not less than 70% of Contract Price and
start of construction of all project facilities
Figures in square bracket may be modified keeping specific requirements of Project
during DPR stage
 Construction of Project Highway Contd….

Stage Payment requirement for Project Milestones shall be proportionately

reduced considering delay in handing over of site.
• Damages to be paid by Contractor if Project Milestone or Schedule Completion date
is not achieved within a period of 30 days from the date set in the Schedule J
@0.05% of the Contract Price for delay of each day reckoned from the date
indicated in Schedule J.
• Authority has to notify Contractor about its intention to levy Damages and
Contractor should be given opportunity to submit representation within 20 days of
notice.
• Ceiling of Damages is 10% of Contract Price. Damages exceeding 10% constitute
default of Contractor without cure and Authority may terminate Agreement.
• Damages paid by Contractor for delay in achieving any Project Milestone shall be
refunded back to Contractor without any interest if Project is completed as per
schedule.
• Contractor restricted from Bidding in future projects of Authority in case Project
(Contract value not less than Rs. 300 crores) completion is delayed by 90 days
unless such delay is due to Force Majeure or reasons attributable to Authority
 Construction of Project Highway Contd….
• Contractor will maintain the Project Highway during construction period so that
traffic worthiness and safety is not inferior to condition on Appointed Date. In
case project involves tunnel/bypass, Contractor shall maintain the existing road until
the new facilities are open to traffic.
• Contractor shall at all times be responsible for safe operation of Project Highway.
• In the event of default by Contractor, Authority may maintain the road in the
manner recommended by AE at risk and cost of Contractor.
• Contractor is entitled to Time Extension for completion of any Project Milestone or
final completion on account of (i) Delay in handing over of site, (ii) Delay in approval
of GAD of RoB/RuB from Railway authorities, (iii) Change of Scope, (iv) Force
Majeure Event, (iv) Any delay attributable to Authority or Authority’s other
contractors etc.
• Notice from Contractor within 15 days of occurrence of event and no later than 10
days after close of every month if the cause persists
• EoT to be granted for affected parts of Project Highway or affected works only
 Construction of Project Highway Contd….

• Quality Assurance & Quality Control:

Quality Assurance Plan to be prepared by Contractor as IRC: SP: 112 and it
will include:
 Organisation, duties and responsibilities, inspection and documentation
 Sampling and testing of materials, test frequencies, standards, testing
facilities, acceptance criteria, recording and interpretation of test results,
calibration of equipment etc.
 Internal Quality Audit System
AE’s approval to QAP within 21 days
Cost of QA & QC to be borne by Contractor
Contractor to give access and facilities to AE to all parts of site, source
locations of materials, production plants etc. for inspection and testing
Pre-construction review of manufacturer’s test reports and standard samples
of manufactured materials by AE
 Construction of Project Highway Contd….

Source approval of AE for naturally occurring materials and

factory manufactured materials
Contractor to carry out tests at such time, frequency and number
as per Specifications and Standards
RFI by Contractor to AE for all works including tests
Authority’s Engineer to witness 100% (earlier 50%) of tests for
each quality characteristic of materials, mixes, compacted layers
etc.
Three business days notice to AE before covering up works by the
Contractor
Authority may arrange external technical audit if required
 Construction of Project Highway Contd….

• Monitoring & Supervision:

• Authority’s right to inspect and review the progress and quality of the
construction of Project Highway and issue appropriate directions to the
Authority’s Engineer and the Contractor
• Monthly Progress Report by the Contractor (within 10 days of month
following) containing status of Contractor’s documents, manufacturing of
materials, progress of construction, mobilisation of personnel & equipment,
sub-contracted works, QA & QC documents, safety statistics, unresolved
disputes, status of applicable permits and compliance thereto, status of
insurances, details of royalty payment etc.
• Suspension of unsafe construction works
• Contractor’s personnel and labour, orderly conduct of personnel, exhaustive
provision for compliance to labour laws, safety and health concerns of labour,
appointment of Safety Officer, Authority’s direct payment to labours and
recovery from Contractor
 Change of Scope

• Change of Scope means any additional work including any associated Test on
completion, change in specification in any item of Works or omission of any
work from Scope of the Project except Works withdrawn under Clause 8.3
• Authority may require the Contractor for Change of Scope within the period
of six months from the Appointed Date. Any such Change of Scope excluding
major structures can be agreed to be executed before expiry of 50% of the
original Scheduled Construction Period subject to condition that it does not
entail any EOT. Contractor may also submit a Change of Scope Request to the
Authority within 90 days from the Appointed Date.
• Change of Scope notice by Authority’s Engineer to the Contractor at the
instruction of the Authority
 Change of Scope Contd….

• Upon receipt of Change of Scope of Notice Contractor shall submit detailed proposal
including design, quantities, drawings, costs and time i.e., impact on Project
Completion Schedule.
• Rate shall be worked out in following manner:
SOR of concerned circle of State PWD as applicable on Base Date. In case non
availability, available SOR to be updated based on WPI. Rates so determined shall be
adjusted factoring tender premium/excess.
Rate of items not available in SOR to be determined as per MoRTH Standard Data
Book and prevailing market rates.
If MoRTH Standard Data Book does not provide requisite details, AE to determine
rates as per Good Industry Practice.
Prevailing market rates to be discounted using WPI to determine market rates on
Base Date
• The costs of existing works or items, which are being changed/ omitted shall also be
valued similar to new works and only net cost shall be considered.
• Time for completion of CoS shall be determined by AE.
 Change of Scope Contd….

• In case the design and rates submitted by the Contractor is not acceptable
to the Authority, Authority may issue Change of Scope Order requiring the
Contractor to proceed at the rates and conditions approved by the Authority
till matter is resolved through dispute resolution mechanism or Authority
may undertake works through separate agency.
• Design charges payable to Contractor for new works (works not similar to
works under original scope) @1% cost of such new works.
• The provisions of construction, supervision, monitoring, testing as applicable
to original Scope of the Project shall also be applicable to Change of Scope.
• Total value of all Change of Scope orders shall not exceed 10% of Contract
Price.
• No Change of Scope shall be executed without issue of Change of Scope
order except emergency works
• Any change necessitated because of default of Contractor shall not
constitute Change of Scope
 Project Completion
• Following tests as specified in Schedule K shall be conducted on completion of
the project.
Visual and physical tests (Details of physical tests to be filled up in Schedule K
during RFP)
Riding quality tests using NSV
Non-destructive tests such as rebound hammer and ultra sonic pulse velocity
test at two spots on each span of bridges
Load Tests on Bridges having more than 15 metre span length
Reflectivity of road marking and road signs
Illumination level of lighting
Environmental Audit
Safety Audit
Any other test specified by AE in accordance with Good Industry Practice
 Project Completion Contd……

• Upon successful completion of tests and receipt of insurance

details, Authority’s Engineer shall issue the Contractor and the
Authority Completion Certificate in the form set forth in
Schedule L.
• Within 30 days from issue of Completion Certificate Contractor
shall remove equipment, materials, debris, and temporary works
from Site, failing which authority may remove the same and
recover the cost+20% there of from Contractor.
 Defects Liability & Maintenance
• Contractor shall be responsible for all Defects in the Defects Liability Period
commencing from the date of issue of Completion Certificate as specified
below:
Road with flexible pavement – 5 years
Road with rigid pavement – 10 years
Road with flexible pavement using perpetual design – 10 years
Stand alone structures such as major bridges/tunnels – 10 years
Stretches with new material/technology used – 10 years
Renewal coat/recycling of BC layer – 3 years
IRQ with DBM/BM and BC – 3 years
• Defect Liability Period deemed to be extended till identified defects are
remedied
• Maintenance Period is commensurate with Defects Liability Period (Figure in
square bracket shall be suitably filled up in RFP)
 Defects Liability & Maintenance Contd….

• Contractor shall be paid following amount for

performance of its maintenance obligations :
 Road with flexible pavement – no payment in the first
year, 0.5% of Contract Price in second, third and fourth
year and 1% of Contract Price in fifth year
Road with rigid pavement – 0.25 % of Contract Price in
first, second and third year, 0.5% of Contract Price in
fourth, fifth, sixth and seventh year and 0.75% of
Contract Price in eighth, ninth and tenth year
 Defects Liability & Maintenance Contd….

 Road with flexible pavement using perpetual design – no

payment in the first year, 0.5 % of Contract Price in
second, third and fourth year, 0.75% of Contract Price
per year till renewal coat/end of maintenance period and
0.25% of Contract Price in remaining period
Stand alone structures such as major bridges/tunnels –
0.25% of Contract Price for the first five years and
0.5% of Contract Price for remaining five years.
• For calculation of maintenance pay out Contract Price will
be adjusted for Change of Scope and works withdrawn
and finally price adjustment done linked to WPI variation
 Defects Liability & Maintenance Contd….

• Maintenance obligations of Contractor:

 Permit safe, smooth and un-interrupted flow of traffic on the Project Highway.
Undertaking maintenance works as specified in Schedule E specifying nature of
defect/deficiency in carriage way, paved shoulders, other shoulders sides slopes,
drains, culverts, road side furniture, lighting, toll plaza, rest area, plantation,
bridges etc. and time limit for repair/rectification of such defects/deficiencies

• External technical audit of maintenance works at the wish of Authority

• Vehicle rescue post by the Contractor with one mobile crane having 30 ton
capacity at location to be specified in RFP
• Specific approval of Authority’s Engineer for lane closure
• Damages to be paid by Contractor for delay in re-opening of close lane @ 0.1% of
monthly maintenance payment for each day delay for every stretch of 250m
(applicable for lane closure exceeding 48 hours)
 Defects Liability & Maintenance Contd….
• Reduction in payment for non-performance of maintenance
obligations by the Contractor using the formula and reduction
percentage for various items/defects/deficiencies as given in
Schedule M
• Authority’s right to take remedial measures i.e. to get repair done
through other agency and recover cost of repair +20% thereof
from Contractor
• Issue of Taking Over Certificate by Authority after Maintenance
Requirements duly carried out, maintenance period expired and
Authority’s Engineer determining Tests on Completion of
Maintenance successful
 Payments to Contractor
• Advance Payment:
Advance is interest bearing (Bank rate i.e. floor rate of interest
announced by SBI for all lending operations plus 3%) compounded
annually
Advance Payment equal to 10% of Contract Price in two
instalments of 5% each
First instalment at any time after Appointed Date along with the
irrevocable and unconditional BG for an amount equal to 110 % of
the instalment
Second instalment at any time after 60 days from Appointed
Date along with the irrevocable and unconditional BG for an
amount equal to 110% of the instalment and utilization certificate
of first instalment
 Payments to Contractor Contd….

Additional interest bearing advance payment against newly purchased key

construction equipment (procured in the name of Contractor and verified by
AE to have been brought into site) upto 5% against BG
Advance Payment to be paid by the Authority within 15 days of receipt of
request from Contractor.
Recovery of Advance Payment from stage payments starting with the first
Stage Payment at the rate of 15 % of each Stage Payment Statements
provided Advance Payment shall be completely repaid prior to 80% schedule
construction period. BG shall be returned back to Contractor within 30 days
from recovering the respective Advance Payment.
If total stage payments don’t exceed 20% of Contract Price by [50%] of
schedule construction period, entire outstanding advance including interest
to be recovered by encashment of BG (Figure in square bracket may be
suitably modified in RFP)
 Payments to Contractor Contd….

In case of termination of contract prior to recovery of Advance Payment for

Contractor Default, it will carry interest @ Bank Rate plus 5% for the
unrecovered advance
• Payment for Construction Works :
Interim payments to the Contractor on monthly basis based on completion of
stages
Stages are measured in units of linear length, number, area as shown in
Schedule H
Contractor to submit Stage Payment Statement for Works with details as
per Schedule O such as estimated amount of work executed since last claim,
price adjustment amount, estimated amount of each COS order since last
claim, any adjustment in price on change of scope amount, deductions, net
claim, amount received by Contractor upto last claim
 Payments to Contractor Contd….

Stage Payments to be worked out as per Schedule H:

 Works are divided into four Items such as “Road Works including culverts, widening
and repair of culverts”, “Minor bridge/underpasses/overpass”, “Major bridge, ROB/
RUB/ Elevated Sections/ flyovers including viaducts” and “Other works”.
Weightage is assigned to each Item in percentage such that total is 100%.
 Each Item has several Stages and percentage weightage is assigned to each Stage
such that sum total of the percentage weightage is 100% for each Item.
 Percentage weightage for respective stages/items shall be reduced to account for
reduction in Contract price for CoS or works withdrawn but no impact on other
stages/items
 Following are given for each Stage in Schedule H:
Unit of measurement (linear length, number, area etc.)
Method of calculation of payment is prorota basis based on gross length, number
etc.
Ceiling for part completion of a Stage (if it is allowed) in length or number for
purpose of payment
 Payments to Contractor Contd….

Payment for a particular Stage (for example bituminous wearing coat) shall be
calculated in following manner :
Cost per km = P x weightage for road work x weightage for bituminous work x
(1/L)
 Ceiling for Stages involving earth work and pavement courses in widening of
existing road is 10% of the total length
 Ceiling for Stages involving earth work and pavement courses in
reconstruction/realignment/bypass and reconstruction/new service
road/slip road is 5 km.
 Length affected due to law and order problem or litigation will not be
considered in total length for the purpose of fulfilling ceiling requirement
of a Stage
 Payments to Contractor Contd….

Ceiling for Stage involving culvert construction is 5 numbers

Cost of each bridge/underpass/ flyover/ grade separator shall be
determined on pro rata basis with respect to the total linear
length of the bridge/underpass/ flyover/ grade separator.
Payment for bridge/underpass/ flyover/ grade separator shall be
made for each bridge/underpass/ flyover/ grade separator on the
completion of 25% of the foundation, sub-structure, for each
span in case of cast in situ structure, 50% for each span after
casting and 50% after launching and completion in all respect.
 Amendment issued on 19 Dec 2022

 Presently payment for pre-cast items such as Bridge Girders, RE Wall

Facia Panels/Blocks are made only after completion of the respective
work/stage including erection / launching as mentioned in schedule H.
Significant working capital of the contractor in Pre-casting of Bridge
Girders & REWall Facia Panels/Blocks is locked for considerable period of
time.
 To improve the cash flow situation of the contractors, sub stages have
been introduced in Schedule H of EPC Projects for making payment
against casting of precast items such as Bridge Girders and RE Wall Facia
Panels/Blocks.
 Insurance
• Contractor shall effect and maintain at its own costs following insurances
from Appointed Date till date of issue of Completion Certificate for any loss
or damage:
Insurance of works, plant and materials and additional sum of [15%] for such
replacement costs to cover any additional cost (Figure in square bracket may
be modified in RFP)
Insurance for Contractors equipment and documents for such replacement
costs
• Contractor shall effect and maintain insurance cover of not less than 15% of
Contract Price from the date of issue of Completion Certificate until the end
of defects liability period
• Contractor shall insure against loss, damage, death or bodily injury or damage
to any property including Authority’s property for any number of occurrence
for a [specified amount]
 Insurance contd…..

• Insurance in the joint name of Contractor and Authority

• Insurance evidence to be submitted by Contractor within 10 days
from Appointed Date
• Authority may take such insurance in case of default on the part
of the Contractor, pay premia and recover cost from Contractor
• Professional Liability Insurance for [3%] of Contract Price to be
taken by Design Director, evidence to be submitted within 30 days
from Appointed Date (Figure in square bracket may be modified in
RFP)
• Insurance against accident to workmen of Contractor
 Force Majeure
• Force Majeure Event :
Derived from “vis major”, Force Majeure is a Latin word that means “Superior
Force”
Force Majeure Event is one that affects performance of the Affected Party
of its obligations and is beyond its reasonable control and the Affected Party
could not have prevented or overcome it by exercise of due diligence and has
adverse material effect on affected party. It has four typical
characteristics:
 Externality
 Unavoidability/irrestibility
 Unforeseeability
 No profit no loss – principle of good faith
 Force Majeure Events are of three types i.e., Non-Political Event, Indirect
Political Event and Political Event
 Suspension
• Suspension of Contractor’s Rights :
Upon occurrence of Contractor’s Default Authority may suspend the Works
or Maintenance or part of same and carry out such works through other
agency. Suspension may extend upto a period not exceeding 90 days
Upon the Contractor having cured its Default or Authority removed the
cause of suspension within a period of 60 days, Authority may revoke
suspension
During the pendency of suspension Contractor may anytime by notice require
Authority to revoke suspension and issue termination notice. Within 15 days
of such notice, Authority will terminate Contract.
In case of suspension is not revoked within 90 days, Contract shall be deemed
to be terminated by mutual agreement and it will be treated as Termination
for Contractor’s Default
 Termination
• Contractor’s Default :
Failure to provide, extend or replenish Performance Security
After replenishing Performance Security, Contractor fails to cure
Contractor Default within 30 days for which Performance Security was
appropriated in full or part
Contractor does not achieve project milestone in time and continuous to
remain in default for 45 days
Contractor abandons Project or stops works (construction/maintenance) for
30 days
The Contractor fails to rectify any Defect
Contractor sub-contracts the works in violation of Agreement.
Contractor is adjudged, bankrupt or insolvent or in the process of being
liquidated etc.
Contractor indulges in unethical activities
 Termination Contd….

• Cure of Contractor’s Defaults:

Upon occurrence of Contractor’s Default Authority may issue cure period
notice to the Contractor. Contractor has to cure the default within period
specified in Agreement (60 days wherever Cure Period is not specified for a
particular Default).
Cure Period will not relieve Contractor from any Damages payable by it.
Authority may extend Cure Period if it considers reasonable.
• Upon occurrence of a Contractor’s Default the Authority may issue a notice
(either directly or after expiry of Cure Period without the Default being
cured) to the Contractor showing intention to terminate contract and
granting Contractor 15 days to make representation. Authority may
terminate contract any time after expiry of 15 days time period
• Authority’s Default:
Authority fail to make payment as per agreement
 Termination Contd….

 Authority becomes bankrupt

 AE fails to issue relevant IPC within 60 days after receiving it
 The whole work is suspended by the Authority beyond 120 days period for any reason not
attributable to Contractor.
• Upon occurrence of Authority’s default Contractor may issue a notice to the Authority
showing intention to terminate contract and granting Authority 15 days to make
representation. Contractor may terminate contract any time after expiry of 15 days time
period
• If Contractor does not issue Termination Notice after 15 days from the date of issue of
intention to terminate notice, the Contracor will be deemed to have waived any claim.
• Authority may terminate Contract for its own convenience and termination becomes effective
within 30 days from the date of issue of notice.
• Upon termination of Contract, Contractor will submit all records to Authority, transfer
applicable permits to the Authority to the extent possible and vacate Site within 15 days.
• Within 30 days from the date of Termination, AE will determine value of unpaid works i.e. for
completed stages of works, partially completed stages of works, maintenance works as
applicable.
 Termination Contd….
• Termination payment on account of Contractor’s Default – Authority to encash
Performance Security, Additional Performance Security, Retention Money and
outstanding BG for un-recovered advance payment by the Authority and pay value
of unpaid works to the Contractor
• Termination payment on account of Authority’s Default/Authority’s convenience :
Return of Performance Security, Additional Performance Security and Retention
Money to the Contractor
Encashment of BG towards un-recovered advance payment
Payment to the Contractor of value of unpaid works + the reasonable cost of
temporary works +10% of the cost of works that are not commenced or not
completed
• Termination Payment to be made within 30 days from the date of claim of
Contractor with all supporting documents. Authority liable to interest @Bank Rate
+3% for delay.
• Upon termination of Contract, the property, ownership of all Materials, Plants,
Works and Project Highway will vest with Authority.
• Foreclosure on mutual consent with drawal of Supplementary Agreement