DEPARTMENT OF WATER AFFAIRS & FORESTRY
ROAD MAP TO MODEL FORMS OF
CONTRACT USED BY LOCAL
GOVERNMENT
Local Government Forms of Contract
Roadmap
1.
Page 1
INTRODUCTION
Local Authorities have and will continue to play the leading role in project implementation and
can use any of the following forms of contract. They can and are being used where the local
authority has adequate capacity to play the role as the IA and award and administer the
required contracts.
Some of the forms of contract that may be used are:
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Traditional Design and Construction contracts
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Term contracts
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Turnkey contracts
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Direct Labour Contracts
This list is not exhaustive and local authorities may have other forms of contract which can be
added here. The following lists give the directions where Local Government Officials can
access the various documentation that may be required for a procurement process for
infrastructure delivery.
2.
DESCRIPTIONS OF FORMS OF CONTRACT
2.1
Traditional Design and Construction Contract
(a)
Key characteristics
This form of contract comprises the use of an independent or in-house technical
advisor or consultant (engineer, architect, etc.) to do the design and documentation
for the project to be executed. Thereafter tenders are called using the documentation
drawn up by the technical advisor. The tender procedure determines the successful
tenderer that will be appointed to execute the project. The same or another technical
advisor can be used to supervise the execution process on behalf of the client.
Supervision can also be done by staff of the client. The supervision usually requires
the technical advisor to check that the contractor adheres to the technical
specifications and monitors the progress of work so as to be able to approve monthly
payments to the contractor.
(b)
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Selection Criteria for the Conventional Contract
Does the client have the resources and want to manage the process?
Is there adequate time for procurement of technical advisors and construction contracts?
Is there adequate time for design?
Does the WSA have approved procurement procedures?
Is the Scope of work well defined or can it be defined in the feasibility and design stage?
Are their experienced contractors that will be able to carry out the contract?
What are other criteria for evaluation to ensure that SMME’s and HDCs are also given a fair chance?
Does the WSA/local government understand that the procurement is usually time consuming as design must
precede tendering and construction?
Is the client aware that he carries all risks of unknowns and scope of work changes?
Does the client realise there is limited provision for maintenance and operatingin this form of contract?
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Local Government Forms of Contract
Roadmap
2.2
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Term Contract
(a)
Key Characteristics
A Term Contract is a contract where a contractor is appointed through normal
procurement procedures for a specific period of time (term) to supply specific goods
and/or services as and when requested. Term contracts are well suited to projects
where a significant, indeterminate quantity of a certain item is required over a long
period. This form of contract produces the best prices from suppliers of very specific
products. If the outcome of the project may not be the product but rather the
completed, operational works it is often convenient to combine these contracts for the
supply of specific equipment or packaged plants or elements of infrastructure. This
does have the disadvantage of division of responsibility with its concomitant
administration problems.
(b)
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Selection Criteria for the Term Contract
Does the client need a fast reaction time once a contract has been awarded?
Does the client want resources available for emergencies?
Can the client have multi year contracts which are normally good value for money as economies of scale are
achieved?
Areas requiring attention
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2.3
Limited to providing specific goods/services only.
Quality control often less prominent later in the contract
Division of responsibilities must be carefully managed.
Requires substantial supervision as contracts are often focused on supply and installation rather than on
ultimate quality of service and performance.
Turnkey Contract
(a)
Description
This form of contract is normally used to design and construct a clearly defined scope
of work. The contractor is appointed to deliver a well-defined end product but the
processes for producing it are not prescribed. The contractor is expected to have the
necessary experience and expertise to design and construct the required end product.
The client is not concerned with how it is done but only that the end product complies
with the set requirements.
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2.4
Selection Criteria for the Turnkey Contract
Is the scope of work well defined?
Is performance clearly defined and achievement auditable?
Does the client not want to control and manage the design and construction process ?
Does the client want to transfer risk? (Risk is mainly with the contractor, but this has a price.)
Will the client entertain alternatives? (Promotes creativity by contractor.)
Is the Client able to judge between different offerings from contractors?
Direct Labour Contract
(a)
Description
This form of contract is normally used where a local authority employs labour directly
to carry out defined tasks.
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Local Government Forms of Contract
Roadmap
(b)
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Selection Criteria for the Direct Labour Contract
Is the scope of work well defined?
Does the client have adequate supervision?
3.
CONVENTIONAL MODEL FORMS OF CONTRACT
3.1
Appointment of Consultants
There are two main areas for the appointment and payment of Engineering Consultants
namely:
3.1.1
South African Association of Consulting Engineers (SAACE)
The South African Association of Consulting Engineers (SAACE) has a series of model forms
of of agreement for Civil, Building, Electrical and Mechanical Services. These Forms of
Agreement for Consulting Engineering Services can be obtained from SAACE in electronic
format for use by District Municipalities at:
http://www.saace.co.za/
3.1.2
Engineering Council of South Africa. (Government Gazette scales of fees)
In terms of section 6(4) of the Engineering Profession of South Africa Act 1990- (Act 114 of
1990), the Engineering Council makes provisions in schedules and the Minister of Public
Works approved such provisions. The current provisions are in terms of Board Notice 109 of
22 December 2000 and can be accessed at the following web address:
Government Gazette fee scales and other information
3.1.3
http://www.ecsa.co.za/
Department of Water Affairs and Forestry
The Department of Water Affairs and Forestry has various standard documentation that can
be used. It can be accesses on the DWAF web site. DWAF has a Professional Services
Contract that may be used for the procuring of professional service providers.
Professional services contract (DWAF)
3.1.4
http://www-dwaf.pwv.gov.za
Department of Public works
The Department of Public works has developed a series of Targeted Procurement documents
that may be obtained from http://www.pwdprocure.co.za/ which relate to affirmable
professional service providers ,
3.2
Contract Documentation and General Specifications
The most widely used Conditions of contract document for the construction of civil engineering
works is:
General Conditions of Contract for the Construction of Civil Engineering works (GCC 90)
which may be purchased at the following address:
http://www.civils.org.za/
The conditions of contract are used in conjunction with standard specifications that can be
obtained at the following sites: SABS 1200 and SABS0120
http://www.sabs.co.za/
The following international contract documentation can be obtained at the following web sites:
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International Federation of Consulting Engineers (FIDIC) http://www.fidic.org/
fidic@pobox.com
or
e mail
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Short form of contract (Green Book)
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Conditions of contract for Construction (Red Book)
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Conditions of Contract for Plant and Design-Build for Electrical and Mechanical Plant
and Engineering Works, designed by the Contractor
First edition 1999 (Yellow
Book)
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Conditions of Contract for EPC/Turnkey Projects (Silver Book) First Edition 1999
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First Edition 1999