Administration of Prime Cost Sums A No Yes

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Flowchart Description Action By Reference

1. Prime Cost Sums or Provisional Sums are included in the Contract Sum

-

2. Is it Prime Cost Sum? -

A. Administration of Provisional Sums

- Refer

Flowchart 20.2

3. Prepare Tender Documents

PT/PO

4 Invitation and Receipt of Tender

PT/PO

5. Tender Evaluation and Nomination / Acceptance

PT/PO

6. Sub-Contract Documentation

PT/CAO

7. Sub-Contract Administration x Commencement x Direct Payment x SO’s consent

PT/CAO

8. Completion -

Flowchart 20.1 – Administration of Prime Cost Sums 4

5

8 6

7 1

2

A No

3 Yes

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20-3 Revision 0 : March 2009

20.1 INTRODUCTION This chapter provides:

x The guidelines on expenditure of Prime Cost (P.C.) and Provisional Sums.

x The guidelines on the preparation of tender documents, contract documents and general administration of nominated sub-contract and supply contracts.

Note: Refer to Section 20.3 for definitions and general overview on procurement of items under Prime Cost Sums and Provisional Sums.

20.2 PROCEDURES

20.2.1 Administration of Prime Cost Sums

(Nominated Sub-Contractor and/or Nominated Supplier)

Step Procedures / Tasks Action By

/ Reference 1 & 2 Prime Cost Sums

Please refer to Flowchart 20.1 – Administration of Prime Cost Sums.

Where the Contract specifically permits the nomination of sub- contractor to carry out works included under Prime Cost, or the SO has elected that works under Provisional Sums shall be executed by nominated sub-contractor or nominated supplier, then the PT/PO shall carry out the tender exercise for

procurement of sub-contract works.

The Project Team must give due consideration to the overall works programme, and ensure the timely nomination of sub- contractor or supplier so as to avoid any delay to the works.

The procedures for preparation of tender documents, invitation, receipt, evaluation and acceptance of tenders, sub- contract documentation, payment, variation, delay and extension of time, non-completion, determination, completion, handing over and defects, and final accounts are similar to that for the main contract, and reference should be made to Chapters 6 to 19, inclusive.

Changes in points of detail are set out in this chapter.

For information

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Step Procedures / Tasks Action By / Reference 3 Preparation of Tender Documents

The procedures for the preparation of tender documents and tender table documents set out in Chapter 6 are generally applicable to the preparation of tender documents and tender table documents for a nominated sub-contract.

The sub-contract tender document shall follow the main contract number, with the words ‘NSC’ and the sub-contract works package number in parentheses appended at the end, eg: JPS/IP/P/1/99(NSC 1).

(a) Generally, the TENDER DOCUMENT FOR WORK comprises the documents in the following order:

x Tender Notice

x Instructions to Tenderer x Form of Tender (JKR 203N1) x Conditions of Contract

(JKR 203N, including amendments and Special Provisions)

x Relevant Particulars of the Main Contract x Specification

x Summary of Tender and Schedule of Rates; or Bills of Quantities

x Schedule of Technical Information x List of Drawings

The sample contents page for the tender document is set out in Volume 10A, Chapter 20.

For information

Action by: PT/PO

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3 (Cont’d)

Preparation of Tender Documents (Cont’d)

(b) Generally, the TENDER DOCUMENT FOR SUPPLY OF MATERIALS OR GOODS comprises the documents in the following order:

x Tender Notice

x Instructions to Tenderer x Form of Tender (JKR 203P 1) x Conditions of Contract

(JKR 203P, including amendments and Special Provisions)

x Schedule of Prices

x Schedule of Technical Information

(c) Generally, the TENDER DOCUMENT FOR SUPPLY OF MATERIALS OR GOODS comprises the documents in the following order:

x Tender Notice

x Instructions to Tenderer x Form of Tender (JKR 203P 1) x Conditions of Contract

(JKR 203P, including amendments and Special Provisions)

x Schedule of Prices

x Schedule of Technical Information

Action by: PT/PO

4 Invitation and Receipt of Tender

The procedures for the invitation and receipt of tender set out in Chapter 7 are generally applicable to the invitation and receipt of tender for a nominated sub-contract.

Invite the Main Contractor to tender for the sub-contract works if the Main Contractor is suitably qualified.

Action by: PT/PO

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Step Procedures / Tasks Action By / Reference 5 Tender Evaluation and Nomination / Acceptance

(a) Tender Evaluation

The procedures for the tender evaluation and acceptance set out in Chapter 8 are generally applicable to the tender evaluation of a nominated sub-contract

In the evaluation of tender, the following percentage

preference are applied for specialist bumiputra contractors for supplies and services:

Value of Work Preference

Weightage Exceeding RM100,000 – RM500,000 10%

Exceed RM500,000 - 1.5 million 7%

Exceeding RM 1.5 million – RM 5 million 5%

Exceeding RM 5 million – RM 10 million 3%

Exceeding RM10 million – RM 15 million 2.5%

Exceeding RM15 million No preference

(b) Nomination & Acceptance

Upon the approval of the Procurement Board, x the SO shall issue the Letter of Nomination the

Contractor and instruct to accept the tender, or x if the Contractor’s tender is accepted, the S.O. shall

issue the Letter of Acceptance to the Contractor.

Action by: PT/PO

Refer: SPP 4/1995

Action by: SOR/SO

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5 (Cont’d)

Tender Evaluation and Nomination / Acceptance (Cont’d) (b) Nomination & Acceptance (Cont’d)

Upon the approval of the Procurement Board, x the SO shall issue the Letter of Nomination the

Contractor and instruct to accept the tender, or x if the Contractor’s tender is accepted, the S.O. shall

issue the Letter of Acceptance to the Contractor.

(i) Letter of Nomination

Use the current form for Letter of Nomination:

x for nomination of sub-contractor: Form JKR 203N3 x for nomination of supplier: Form 203P3

(ii) Letter of Acceptance

x Use the current form for Letter of Acceptance of Main Contractor’s Tender for work or Supply of Materials or Goods Under Prime Cost Sum, where the Main Contractor shall carry out works allocated under Prime Cost or Provisional Sums.

Use the current and appropriate form for the nomination, notification and/or acceptance, as the case may be.

Action by: SOR/SO

6 Sub-Contract Documentation

The procedures for the preparation of contract document set out in Chapter 9 are generally applicable for the preparation of the sub-contract documents.

The sample contents page for the contract document is set out in Volume 10A, Chapter 20.

Action by: PT/CAO

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Step Procedures / Tasks Action By / Reference 7 Sub-Contract Administration

(a) Generally

Generally, the Contractor is fully responsible for the acts of the Sub-Contractor/Supplier.

With the exception of payment matters, the Contractor is also responsible for the day-to-day administration of the sub- contract / supply contract, including matters (where applicable) relating to

x Variations

x Delays and Extension of Time x Non-Completion

x Loss and Expense x Determination

The written consent of the SO is required before the Contractor may agree to, or grant, and additional time to the sub-

contractor, or to determine the employment of the sub- contractor / supplier, as the case may be.

(b) Direct Payment

Direct payment to nominated sub-contractors and suppliers are permitted under the terms of the contract and sub-contract, subject to the following procedures or conditions are fulfilled:

(a) Direct progress payment up to the limit of 90% of Sub- contract Sum

(b) The remainder 10% of the Sub-contract Sum shall be paid to the Main Contractor after the issuance of the Certificate of Practical Completion. The PT shall ensure that the Main Contract releases the remainder sums to the Sub-

Contractor after the Defects Liability Period.

(c) Ensure that the conditions for direct payment are included in the tender documents and the sub-contract.

(d) The sub-contractor is registered as bumiputra contractor under the relevant class, and is a local contractor operating at the area where the project is to be carried out.

For information

Action by: PT/ CAO/

Finance Division

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7 (Cont’d)

Sub-Contract Administration (Cont’d) (b) Direct Payment (Cont’d)

(e) Ensure that the conditions for direct payment are stated in the Letter of Acceptance (LoA) to the Main Contractor, and that the Main Contractor submits the a complete list of sub-contractors he intents to employ.

(f) Ensure that there is no assignment of payments to others, other than the sub-contractors listed by the Main

Contractor.

(g) The Main Contractor is not permitted to amend the list of sub-contractors without written permission of the Government/DID.

(h) The main contract includes an indemnity clause to safeguard the rights of the Government / DID.

(c) Written Consent of the S.O.

The written consent of the SO is required before the Contractor may carry out any of the following under the terms of the sub- contract:

x Permit sub-contractor’s to employ workmen not in accordance with Government’s prescribed ratio (clause 12(b))

x Permit Sub-letting (clause 19)

x Grant extension of time (clause 26(b))

x determine the employment of the sub-contractor (clauses 28(a) and (b)).

x employ others or himself undertake the sub-contract work following the determination of the nominated sub- contractor (clause 28(c)(ii)).

Action by: PT/ CAO/

Finance Division

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Step Procedures / Tasks Action By / Reference 7

(Cont’d)

Sub-Contract Administration (Cont’d) (c) Written Consent of the S.O. (Cont’d)

In addition to the above, the S.O.’s certificate is required for the following:

x a certificate, stating the nominated sub-contractor’s default, be issued by the S.O. prior to calling of performance bond by the Main Contractor (clause 24(b))

x a certificate, stating that the nominated sub-contractor is in delay, prior to deduction for loss or damages by the Main Contractor (clause 27).

(d) Default on the Part of the Sub-Contractor / Supplier Where the Nominated Sub-contractor or Supplier in the execution of the work or the supply of the materials or goods under the sub-contractor, the Main Contractor shall be responsible to have the works executed or the materials or goods supplied by whatsoever means necessary.

The Government/DID is not required to re-nominate. The contractor is only entitled to be paid the same sum as if the Nominated Sub-contractor or Supply had not defaulted, and the contractor is not entitled to extension of time by reasons of such default.

Action by: PT /SO

For information

7 & 8 Commencement and Completion of Sub-Contract Works The Main Contractor shall issue an Official Order to Commence, using form JKR 203N5, and the Nominated Sub-Contractor is required to complete the works within the time for completion stated in its Form of Tender.

Nominated Supplier

The Main Contractor shall issue an Order For Supply and Delivery of Articles, using form JKR 203P5, and the Nominated Supplier is required to complete the supplies within the time for completion stated in its Form of Tender.

Defects Liability

Refer to the Main Contract for defects liability obligations and rights.

For information