Part 12 - Do You Know the Entire Contract

 

Critical Components in Special Conditions/Supplemental Terms and Conditions  -  Part B

In most contracts, the Contract Terms and Conditions may be amplified using sections for Special Conditions (SC) or Supplemental  Terms and Conditions (STC).

This is the 12th in a series of discussions that is intended to prompt Project Teams to be aware of the entire contract document, including Information For Bidders (IFB), General Conditions/Terms and Conditions (GCs) and the Technical Requirements [Specifications and Drawings.] 

In the rail transit domain, there may be unique requirements that are created by work conditions, from implementation of alternative delivery methods, for multiple milestones with liquidated damages and for incentives to beat performance milestones.   By exception, these requirements are expressed in SC and STC.

INSURANCE :   Typically, insurance requirements cover General Liability, Workmen’s Compensation, automotive, and professional liability.  The scope and insured amounts are established by the Buyer’s legal and risk management groups.   In a railroad environment, the requirements are supplemented to include:

Railroad Protective:   This coverage applies to a contract work zone that requires the contractor to work under hazards such as moving passenger trains and on-track vehicles, high voltage third rail and overhead catenary systems.

Environmental:   This coverage applies to a contract work zone where there is known materials and risks of hazardous materials, such as contaminated soil, asbestos containing materials and cables, lead in paint and cable insulation, and hazardous materials in soils such as PCBs and mercury.

WARRANTY:   Generally, the standard contract form specifies the requirements for warranty of the products, including the period based on a defined date typically a contract milestones, such as Substantial Completion.    However depending on the complexity of systems, first time applications of technology or unique execution means and methods in an operations environment, trade standard warranty requirements may not be adequate.    In these cases, Buyer’s will supplement requirements with processes and metrics.

The SC and STC Warranty requirements such as:

• Seller’s time to respond to Buyer’s request
• Buyer’s right to perform repairs
• Seller’s time to complete repairs after Buyer’s request
• Seller’s inventory of spare parts
• Management of manufacturer’s warranties

TIP:    Warranty commercial requirements in the SC/STC should be coordinated with requirements that are identified in technical specifications.

MATERIALS PROVIDED BY BUYER:    Division of work on contract uniformly specify the contractor responsibilities for labor, materials, equipment and supervisory services to complete the work.   In unusual circumstances, the contract requirements stipulate the Buyer provides the Seller with materials for installation as part of the contract scope.    As a result, the contract will incorporate technical information in the Div 1 specifications, and commercial conditions for transfer of materials between Buyer and Seller and the responsibilities for accepting and storing materials for installation when required.   This may include warehousing requirements, bonding, insurance and processes for accepting materials.  

TIP:  Ensure the project risk management plan and the contract management plan includes the required resources and processes for executing and managing the work under this project requirement.

TIP:   Ensure a cost benefit justification is documented to support the decision for the division of work on the contract.