Contract administration-contractual resolution report



Analyse the following two problems and prepare a report relating to the contractual requirements.

Problem 1


A tender has been issued to the market to supply and install Mechanical System for a 30-storey apartment building in a Coastal area. After tendering, the Principal and the Superintendent found that
the Tender offers were beyond the budget allowance for the project. Hence tenderers were asked to provide value management options to reduce the project cost. One of the Tenderer’s alternative
proposal was subsequently accepted. The selected tenderer also a well experienced Mechanical contractor who specialized in such systems. The system included the use of insulated copper pipes for
the circulation of chilled water. While progress on the Contract the Superintendent issued an Instruction to change the certain extent of the chilled water pipes to PEX pipes which resulted in a
cost saving to the Client. During the Defects Liability Period of the project, the Principal found that the AC system was not performing adequately. As a result, the Principal was unable to sell
certain apartments. The Superintendent asked to investigate the matter and found that the PEX pipes which were installed as underground pipes were clogging and mixed with ground water. It was
concluded that weak joint between PEX and Copper installed underground to cause the issue which affected the chilled water flow and a severe drop in the performance. The Superintendent issued an
instruction to the Contractor to rectify the situation. The contractor also noted that Water Table shown on the Contract Document was published in 5 years ago and ground water also salty and
content high level of calcium. After the incidence, the Contractor also questions whether it is a good practice to use PEX/ copper joint for underground applications.

Accordingly, the Contractor submitted a claim, for the Superintendent approvals.


Problem 2


For a multi-storey building project, the Geo-technical engineer provided with a borehole tests to ascertain soil condition prior to designing of the substructure. The type of recommended Foundation
was bored piles of various diameters. Subsequently, the project was awarded to a major contractor to complete the demolition and basement construction works with a commencement date of 3rd October
and a completion date of 16th December. Halfway through the installation of bored piers, the contractor encountered severe difficulties in one corner of the site. It was found that bored piers
could not be continued due to excessive soft spots around the area. The existence of soft spots wasn’t captured in the borehole tests reports for some reason. The Contractor notified the situation
to the Superintendent and had to stop work until such time a revised design was given through the consultant. The Superintendent engaged another Geo-technical Engineering to provide a report on the
ground and the Structural Engineer to provide a revised design. The Superintendent issued an instruction with revised design details only after 12 working days since the first notice was received
from the contractor. This caused the piling contractor to idle his plants and labour from the site with delay period and Christmas holidays.

Accordingly, the contractor submitted a claim for extension of time and cost, for the Superintendent approvals


What are the Contractor’s entitlements under AS 2124-1992 general conditions of contract in relation to the problems 1 and 2? You should support your answers with relevant clauses in AS 2124–1992.
Also you have to provide recommendations for good contract practices to avoid above mentioned situations. You have to acknowledge sources of your responses for good contract administration practice
in the industry.


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