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.
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?
Airports Authority of India
Financial control in Project Management
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Administrative Approval and Expenditure SanctionFinance Concurrence point of view
Does the proposal of AA/ES for Capital works and Special repairs
contain Preliminary Estimates?
Is the proposal counter signed by the TS authority?
Does the proposal file carry draft AA/ES as per Appendix -1 of the
Works Manual?
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.
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.
FC should indicate the competent authority for granting AA/ES with
reference to DOP, Chapter 6.
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.
1) 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.
2) 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.
Airports Authority of India
Financial control in Project Management
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Proposal for Award of Work
To check whether the NIT has been approved by the Competent Authority as per
DOP 6.4 .
To check whether all actions that are required as per Works Manual 9.11 and
9.12. have been completed.
To check that for publicity of tender guidelines as per section 26 of the works
manual has been followed.
The latest guidelines issued from time to time for e-tender process is to
checked for compliance.
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 AA&ES??
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.
Airports Authority of India
Financial control in Project Management
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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.
Airports Authority of India
Financial control in Project Management
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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.
Airports Authority of India
Financial control in Project Management
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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.
Airports Authority of India
Financial control in Project Management
Payment to Contractors-Bill processing- Contd…
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To check that all extra and /or substituted items have been approved by the
competent authority. (Section 33 of the works manual)
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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
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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 GM’s 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.
Service tax details to be also captured for cenvat credit as applicable.