Classification of Contracts based on value

1
Airports Authority of India Financial control in
Project Management

• Classification of Contracts based on value
• Mega Projects above Rs 1000 crores
• Major Projects between Rs100 crores to Rs 1000
  Crores
• Minor projects less than Rs 100 Crores
• Classification based on type of works
• Composite Contracts Normally such types of
  contracts contains all activities like
  construction, supply, installation and
  furnishings
• Construction contracts Excludes supply and
  installation of major equipments.
• SITC Supply ,Installation, Testing and
  Commissioning contracts. This may be for Aircon,
  Power Supply equipments, Escalators, Lifts, PBB,
  CNS equipments, XBIS, etc.

2
Airports Authority of India Financial control in
Project Management

• Preliminary Estimates- Points from Finance
  concurrence angle
• 1) Does the estimate include expected escalation
  considering completion period?
• 2) Is the draft Scope of work formulated and
  approved by the competent authority?
• 3) Has the cost index been applied to lump sum
  items and market rate based estimates?
• 4) Have all subheads identified and grouped with
  estimated cost thereon? (Refer 9.6.1 of Works
  Manual)
• 5) Is the estimate for pavement work (Runways,
  Apron etc.)Yes-Has the item for Measurement of
  PCN value before commencement of work and after
  completion included in the estimate?
• 6) Is the estimates for resurfacing ,
  strengthening extension of Runway/Apron/Taxiway
  Yes - Does the estimate give the break up of
  the three items separately?
• 7) Does the estimate contain allowance for
  operational area, remote areas, disturbed area,
  WCT, Contingency etc if so does it meet the
  requirements of Para 10.6.1 read with Appendix 10
  of the Works Manual?

3
Airports Authority of India Financial control in
Project Management

• Administrative Approval and Expenditure Sanction-
  
• Finance Concurrence point of view
• 1) Does the proposal of AA/ES for Capital works
  and Special repairs contain Preliminary
  Estimates?
• 2) Is the proposal counter signed by the TS
  authority?
• 3) Does the proposal file carry draft AA/ES as
  per Appendix -1 of the Works Manual?
• 4) Are the details of Budget Provisions mentioned
  in the proposal as per approved Annual? The
  provisions should be checked by the Finance from
  its record and authenticated.
• 5) The column Head of Account in the draft AA
  ES should be filled by Finance while giving the
  concurrence and give the correct Code of accounts
  along with responsibility code.
• 6) FC should indicate the competent authority for
  granting AA/ES with reference to DOP, Chapter 6.

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Airports Authority of India Financial control in
Project Management

• 7) Does the AA/ES proposal contain the proposed
  mode of execution for example Global Tender, Open
  Tender, Limited Tender etc?
• 8) Finance department should maintain the details
  of AA/ES accorded against each approved scheme
  and mark it as allocated. The proposal concurred
  should contain a unique reference number.
• 9) Is the proposal covered under any approved
  Budgeted Scheme? If not the proposal has to be
  treated as Non Budgeted and processed as per DOP
  6.1.2/6.1.3.
• Revised AA/ES Appropriation of funds.
• To check whether the proposal is for
  re-appropriation of funds between subheads of the
  same approved scheme ?If so whether it has been
  dealt as per 9.6 of the Works Manual.
• Revised AA/ES would be required in cases where
  the actual expenditure exceeds the AA/ES amount
  by more than 10 and the same requires
  appropriation of budget by the competent
  authority as Works Manual clause 9.5 and DOP
  6.1.1.
• 3) Does the actual expenditure exceed 10 of the
  Technical sanctioned amount? If yes, then
  whether revised TS has been taken as per Works
  Manual 9.9.

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Airports Authority of India Financial control in
Project Management

• Proposal for Award of Work
• 1) To check whether the NIT has been approved by
  the Competent Authority as per DOP 6.4 .
• 2) To check whether all actions that are
  required as per Works Manual 9.11 and 9.12. have
  been completed.
• 3) To check that for publicity of tender
  guidelines as per section 26 of the works manual
  has been followed.
• 4) The latest guidelines issued from time to
  time for e-tender process is to checked for
  compliance.
• 5) In case of Limited tenders whether the
  guidelines as per para 26.3 of the works Manual
  has been complied with?
• While processing for acceptance it should be
  ensured that time limits as prescribed in
  para26.4.1 has been followed.
• To check that Statement of Justified Cost opened
  along with the Price bid is in conformity to the
  provisions of para 28.3 of works manual.
• Whether the proposed total award value is within
  the approved AAES?? Reference to TI 71 Dated
  10/01/11 is invited.
• Whether the lowest price bid is within 5 of the
  Justified Cost?? If yes then it can considered
  for award by the competent authority subject to
  all other conditions being satisfied. If No, then
  only deviations upto 10 can be considered by the
  next higher authority subject to recording of
  proper justification by the Engineering
  department.

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Airports Authority of India Financial control in
Project Management

• Earnest Money
• During Financial concurrence it should be seen
  that the amount of EMD defined in the tender
  document should be as per para 29.2 of the works
  manual.
• The mode of payment should be as per para 29.4 of
  the works manual.
• Refund of EMD should be in conformity to para
  29.5 of the works Manual.
• The proposal for forfeiture of EMD should be
  concurred with reference to 29.6 of the works
  manual.
• The schedule of EMD should be reviewed
  periodically and either the EMD should be
  converted to SD or forfeited and transferred to
  miscellaneous Income. Any amount lying unadjusted
  to be referred to the concerned Department for
  confirmation of the status. The accounting policy
  15 (iii) to be followed.

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Airports Authority of India Financial control in
Project Management

• Security Deposits
• While processing the 1st RAR bill it should be
  ensured that the amount of SD has been defined in
  the work order as per para 30.1 of the works
  manual.
• The EMD should be converted into SD and the
  balance if any should be recovered from the RAR
  bill. In case the EMD converted into SD is more
  than the SD as per RAR the difference will be
  adjusted against the 2nd RAR. No refund should be
  made.
• In case the work order specifies that the party
  can submit the SD in the form of Bank guarantee
  then before release of the SD/EMD amount the BG
  should be verified from the issuing bank.
• For acceptance of SD in the form of BG/FDR the
  procedure given in para 30.3 and 30.4 of works
  manual should be followed.
• Refund of SD should be in conformity to section
  31 of the works manual.

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Airports Authority of India Financial control in
Project Management

• Payment to Contractors-Bill processing
• While processing the payment of Mobilisation
  Advance first it has to be ensured that the NIT
  approving authority has specifically approved the
  payment of this advance. (Para 39.1 of works
  manual)
• The rate of interest to be charged for this
  advance should be verified from the contract. In
  case the contact is silent then the rate of
  interest should be taken as 10.
• Accrued interest and principal should be
  recovered from the RAR bills.
• Mobilisation advance should be secured by a BG.
• While processing claims of Secured Advance it
  should be ensured all the formalities given in
  works manual para 39.2 is completed.
• Before payment of Secured Advance the bill
  paying officer should ensure that the materials
  are insured as per Appendix 67 of the works
  manual.
• No second Secured advance to be paid till the
  first such advance has been fully recovered.

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Airports Authority of India Financial control in
Project Management

• Payment to Contractors-Bill processing- Contd
• 8) To check that all extra and /or substituted
  items have been approved by the competent
  authority. (Section 33 of the works manual)
• To check all deviations in quantity are within
  the limits specified in the contract.
• To check that extension of time if any has the
  approval of the competent authority as per DOP
  6.9.
• The Liquidated Damages recovered /with held are
  properly deducted from the payment and accounted
  for. Release of with held amount should be with
  the approval of the competent authority.
• Payment of escalation provided in the agreement
  should not be contravention to the provisions of
  para 32.10 of the works manual.
• Test checking of measurements should be available
  with every bill as per Section 17 of the Works
  manual.

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Airports Authority of India Financial control in
Project Management

• Other Important Points to be noted while making
  payments
• The status of the contractor that is whether it
  is a Sole Proprietor, Partnership Firm, Private
  Limited Company, Public Limited Company, Limited
  Liability Partnership (LLP) should be established
  by the bill processing officer.
• In case of Joint Venture then the payment should
  be made to the Joint Venture Enterprise only.
  Payment in ratio or percentage to the individual
  consortium entities should be avoided. In
  exception it should have the approval of the
  tender accepting authority.
• The PAN details of the entity should be obtained
  and verified from NSDL/Itax department before
  the first payment.
• TDS should be deducted as per the rates specified
  in the Income Tax Act. In case the party submits
  certificate from the IT department entailing
  deduction at lower or nil rate then the same
  should be approved by the GM/Incharge of Finance
  of the region/station/project specifically.
• TDS returns should be submitted within the given
  dates and it would be advisable to have a
  mechanism to report the compliance to the GM of
  the region/ Airport/ project on quarterly basis.
• The report for every quarter should be downloaded
  and printed from the NSDL/IT site for every TAN
  number and placed on the file to the GMs
  concerned along with the compliance report. This
  will be required for TAX audit.
• The name of the company and status as given by
  the contractor along with the bank details for
  e-payments/RTGS should be verified from the bank
  concerned through mail/letter in each case before
  releasing the first payment.
• 8) Service tax details to be also captured for
  cenvat credit as applicable.