UNIT 1

1. TENDER

TENDERS ARE OPEN INVITATION TO BUY OR SELL GOODS/SERVICES/CONTRACTS

THOSE WHO ARE INTERESTED IN SUPPLYING WHAT HAS BEEN ADVERTISED, CAN RESPOND TO A TENDER &
SUBMIT THEIR BEST COMPETITIVE OFFER. THE BEST COMPETITIVE OFFER (LOWEST BIDDER OR L1) IS
GENERALLY SELECTED & THE CONTRACT IS AWARDED TO L1 BIDDER

2. TYPES OF TENDER (TENDER PROCESS)

TENDERS CAN BE ISSUED THROUGH

EXPRESSIONS OF INTEREST (EOI) - USED TO SHORTLIST POTENTIAL SUPPLIERS BEFORE SEEKING
DETAILED OFFERS.
REQUEST FOR INFORMATION (RFI) - USED IN THE PLANNING STAGE TO ASSIST IN DEFINING THE
PROJECT, HOWEVER, NOT USED TO SELECT SUPPLIERS.
REQUEST FOR PROPOSAL (RFP) - USED WHERE THE PROJECT REQUIREMENTS HAVE BEEN DEFINED,
BUT AN INNOVATIVE OR FLEXIBLE SOLUTION IS NEEDED.
REQUEST FOR QUOTATION (RFQ) - INVITES BUSINESSES TO PROVIDE A QUOTE FOR THE PROVISION OF
SPECIFIC GOODS OR SERVICES.
REQUEST FOR TENDER (RFT) - AN INVITATION TO TENDER BY PUBLIC ADVERTISEMENT OPEN TO ALL
SUPPLIERS.

3. TENDER DOCUMENTS

1. TENDER FORM
2. GENERAL / SPECIFIC CONDITIONS OF TENDERS
3. DRAWINGS / SCHEMES
4.

PREAMBLE TO BILL OF QUANTITIES

5.

BILL OF QUANTITIES

6. TECHNICAL SPECIFICATIONS OF WORKS

7. SUMMARY OF TENDER

3.1. TENDER FORM

3.2 GENERAL CONDITIONS OF TENDER

3.2.1 Definitions

FOR THE PURPOSE OF THESE GENERAL CONDITIONS OF TENDER AND SPECIAL CONDITIONS OF TENDER,
WORDS AND EXPRESSIONS USED THROUGHOUT SHALL, EXCEPT WHEN THE CONTEXT OTHERWISE
REQUIRES, HAVE THE SAME MEANING ASSIGNED TO THEM UNDER CLAUSE

1(1) OF THE GENERAL CONDITIONS OF CONTRACT. IN ADDITION, THE FOLLOWING WORDS AND
EXPRESSIONS SHALL HAVE THE MEANING HEREBY ASSIGNED TO THEM:

(A) ENGINEER/ARCHITECT/MAINTENANCE SURVEYOR DESIGNATE MEANS ____

(A) (B) UNINCORPORATED JOINT VENTURE, PARTICIPANT, INCORPORATED JOINT VENTURE AND
SHAREHOLDER SHALL BEAR THE SAME MEANINGS AS THOSE GIVEN IN PARAGRAPH 6 OF THE
ENVIRONMENT, TRANSPORT AND WORKS BUREAU TECHNICAL CIRCULAR (WORKS) NO. 50/2002 ON
CONTRACTORS JOINT VENTURE.

IS :- Indian Standard
A.S.T.M :- American Society for Testing and Materials
A.W.S :- American Welding Society
MM or mm :- Millimetre /s
CM & cm :- Centimetre /s
RM (rm) / RMT (rmt) :- Running metre /s
KG (kg) :- Kilogram /s
Tonne/t/MT :- Metric ton/s (1000 Kilogram's)
Dia. :- Diameter
Sqm :- Square metre
Cum:- Cubic metre
No.:- Number/s
Qty.:- Quantity
L.S :- Lump sum.
QRO:- Quote rate only.
Drg.No. :- Drawing number
PCC:- Plain Cement Concrete
RCC:- Reinforced cement concrete
HSD:- High Yield strength Deformed bars.
MS:- Mild Steel
CRS:- Corrosion resistance steel.
CTD:- Cold Twisted Deformed steel.
TMT :- Thermo Mechanically Treated Bars

3.2.2 Documents issued

(B) ONE COPY OF BOOKLET CONTAINING:

(I) FORM OF TENDER,
(II) PARTICULAR PREAMBLES AND BILLS OF QUANTITIES/*SCHEDULE OF QUANTITIES/ *SCHEDULE OF
RATES
(III) PLANT AND LABOUR SCHEDULE/*EQUIPMENT SCHEDULE/*SCHEDULES OF PARTICULARS,
(IV) SUMMARY OF TENDER,
(V) SCHEDULE OF PROPORTIONS TO BE USED IN CALCULATING THE PRICE FLUCTUATION FACTOR,

3.2.3 Documents not issued

(C) GENERAL SPECIFICATIONS
(D) ARBITRATION ACT
(E) SUB CONTRACT CLAUSE

3.2.4 Tender Submission

(1) THE FOLLOWING DOCUMENTS SHALL BE ENCLOSED IN A SEALED ENVELOPE ADDRESSED,
ENDORSED AND DEPOSITED AS REQUIRED BY THE GAZETTE NOTIFICATION OR LETTER OF
INVITATION TO TENDER OR THE TENDER NOTICE: ONE SET OF THE DOCUMENTS REFERRED TO IN
CLAUSE
(2) ABOVE WITH: THE FORM OF TENDER IN HARD COPY FORMAT FULLY COMPLETED, SIGNED,
WITNESSED AND DATED.
(3) THE *BILLS OF QUANTITIES/*SCHEDULE OF QUANTITIES/*SCHEDULE OF RATES IN EITHER HARD
COPY FORMAT OR ELECTRONIC FORMAT [SEE NOTE 1] FULLY PRICED AS TO EACH ITEM,
EXTENDED, CAST AND TOTALLED AS APPROPRIATE. [SEE ALSO NOTE 2]

3.2.5 Financial Information

3.2.6 Unauthorized alterations

3.2.7 Discrepancies in Documents

3.2.8 Clarifications of Documents
3.2.9 Errors in Tender submission
IN THE EVENT OF A TENDERER DISCOVERING AN ERROR IN HIS TENDER AFTER IT HAS BEEN DEPOSITED,
ATTENTION IN WRITING MAY BE DRAWN TO THE ERROR AND AN AMENDMENT SUBMITTED WHICH,
PROVIDED THAT THE AMENDMENT SHALL HAVE BEEN DEPOSITED BEFORE THE TIME FIXED FOR RECEIPT
OF TENDERS, SHALL BE ACCEPTED.

3.2.10 Correction rules for tender errors

WITHOUT PREJUDICE TO OTHER GENERAL CONDITIONS OF TENDER AND SPECIAL CONDITIONS OF
TENDER, IF ERRORS AND/OR OMISSIONS ARE FOUND IN A TENDER DURING TENDER EXAMINATION, SUCH
ERRORS AND/OR OMISSIONS SHALL BE DEALT WITH IN ACCORDANCE WITH THE PRINCIPLES

3.2.11 Tender Currency

3.2.12 Tender Negotiation
THE EMPLOYER RESERVES THE RIGHT TO NEGOTIATE WITH ANY TENDERER ABOUT THE TERMS OF
THE OFFER.

3.2.13 Erratic Pricing

WITHOUT PREJUDICE TO THE GENERALITY OF THE OTHER GENERAL CONDITIONS OF TENDER AND
SPECIAL CONDITIONS OF TENDER, THE EMPLOYER MAY REGARD A TENDER AS NOT BEING THE MOST
ADVANTAGEOUS, IRRESPECTIVE OF WHETHER OR NOT IT IS THE LOWEST TENDER OR THE TENDER WITH
THE HIGHEST OVERALL SCORE, IF IN THE EMPLOYERS OPINION

(A) THE BILLS OF QUANTITIES/SCHEDULES OF RATES OF THE TENDER HAVE BEEN PRICED ERRATICALLY
WHETHER OR NOT SUCH ERRATIC PRICING IS THE RESULT OF THE APPLICATION OF ENVIRONMENT,
TRANSPORT AND WORKS BUREAU TECHNICAL CIRCULAR (WORKS) NO. 41/2002**; AND

(B) THE ERRATIC PRICING IS SUCH AS TO EXPOSE THE EMPLOYER TO AN UNACCEPTABLE LEVEL OF
FINANCIAL RISK.

3.2.14 Tender addenda

3.2.15 Unreasonably low bid
3.2.16 Site Investigation
3.2.17 Copyright Information
THE DOCUMENTS, PLANS, DRAWINGS OR OTHER MATERIALS FORMING PART OF THE TENDER
DOCUMENTS SHALL ONLY BE USED BY A TENDERER OR ANY PERSON AUTHORIZED OR LICENSED BY THE
TENDERER FOR THE PURPOSE OF PREPARING HIS TENDER. ALL OTHER RIGHTS IN THE AFORESAID
MATERIALS ARE RESERVED BY THE RELEVANT COPYRIGHT OWNERS. THE TENDERER SHALL BE LIABLE TO
THE EMPLOYER FOR BREACH OF THE FOREGOING BY ANY SUCH PERSON AS IF THE BREACH WERE
COMMITTED BY THE TENDERER.

3.2.18 Management of Sub Contractors

3.2.19 Alternatives Tenders / Designs
3.2.20 Offering Gratuities
THE TENDERER SHALL NOT AND SHALL ENSURE THAT HIS AGENTS AND EMPLOYEES SHALL NOT OFFER OR
GIVE ANY ADVANTAGE, GRATUITY, BONUS, DISCOUNT, BRIBE OR LOAN OF ANY SORT TO ANY AGENT OR
EMPLOYEE OF THE EMPLOYER OR TO THE ENGINEER/ARCHITECT/MAINTENANCE SURVEYOR* DESIGNATE
OR TO ANY MEMBER OF THE ENGINEER/ARCHITECT/MAINTENANCE SURVEYOR* DESIGNATES STAFF.

3.2.21 Anti collusion

THE TENDERER SHALL NOT COMMUNICATE TO ANY PERSON OTHER THAN THE EMPLOYER THE AMOUNT
OF ANY TENDER, ADJUST THE AMOUNT OF ANY TENDER BY ARRANGEMENT WITH ANY OTHER PERSON,
MAKE ANY ARRANGEMENT WITH ANY OTHER PERSON ABOUT WHETHER OR NOT HE OR THAT OTHER
PERSON SHOULD OR SHOULD NOT TENDER OR OTHERWISE COLLUDE WITH ANY OTHER PERSON IN ANY
MANNER WHATSOEVER IN THE TENDERING PROCESS UNTIL THE TENDERER IS NOTIFIED BY THE
EMPLOYER OF THE OUTCOME OF THE TENDER EXERCISE. ANY BREACH OF OR NON-COMPLIANCE WITH
THIS SUB-CLAUSE BY THE TENDERER SHALL, WITHOUT AFFECTING THE TENDERERS LIABILITY

3.2.22
Statement Of Convictions Under The Employment Ordinance
3.2.22.1
Statement Of Convictions Under The Immigration Ordinance
3.2.23
Ethical Commitment
3.2.24
Tender Cost

3.3 Drawings & Schemes

3.4 Preamble to Bill of Quantities

3.5 Bill of Quantities

3.5 Technical Specification of works

The sample of tiles/slabs to be submitted to the Architect/Engineer for approval.
For floor tiles, all edges to be sorted for straight edges before laying. The tile will be laid after approval from the Architect / Engineer at site.
The rate to include all mirror machine polishing for Marble and wax mirror polishing or Titanium polishing for Kota stone. The final decision will
be as per Architects instructions.
The cost of tile/stone mentioned below is the maximum cost. In no circumstances it should exceed the one mentioned in the respective items
and is inclusive of all material cost, transportation, Octroi if applicable, loading-unloading and all taxes, statutory as applicable.
For staircase treads and risers, the stone shall be in one piece unless otherwise specified. The contractor to measure the dimensions at site
before ordering the materials.
All bull nosing, polishing etc for sills, frames and staircase treads should be factory finished and brought to site.
The joints for all flooring to run in a straight line and should not exceed 1.5mm for stones and 1mm for tiles and should be filled with grouts to the
full depth
The rate for all the flooring items (whether specifically mentioned or not) to include
(a) All materials, labour, surface preparation, working at all levels, tools and plants, machine polishing for stones like Marble, Kota
(b) Providing and laying polythene and layer of 12 mm thick Plaster Of Paris in two layers on existing flooring surface (For the projection of floor
surface during other activities). Rate should be including cost of removing this protective layer, (after the work is completed) carrying all debris
out of site and dumping it to municipal authorised dumping ground, cleaning the entire covered flooring area.
(c) Grouting the joints as mentioned in the individual items
(d) Soaking the tiles in water for at least two hours before laying
(e) Curing
(f) Cleaning the surface
(g) Cleaning and disposing off the debris at a location as desired by the Architect at site
(h) In case adhesives are used for flooring, the rate to be inclusive of extra cement bedding required to match the existing levels. IN case,
adhesives are used for cladding on walls, the rate to include backing coat plaster in cement mortar 1:3, to bring the wall in proper plumb, line
and level.
(i) Receiving all materials supplied by the employer, unloading, storing, conveying to work site and fixing in position

3.6 Tender Summary

EMD EARNEST MONEY DEPOSIT

EARNEST PAYMENT
A DEPOSIT PAID TO DEMONSTRATE COMMITMENT AND TO BIND A CONTRACT, WITH THE REMAINDER DUE AT
A PARTICULAR TIME. IF THE CONTRACT IS BREACHED BY FAILURE TO PAY,THEN THE EARNEST PAYMENT IS
KEPT BY THE RECIPIENT AS PRE-DETERMINED OR COMMITTED DAMAGES.

4. TENDER NOTICE

5. TENDER SCRUTINY AND ANALYSIS

EACH TENDER WILL INITIALLY BE ASSESSED TO DETERMINE IF IT COMPLIES WITH ALL REQUIREMENTS OF
THE TENDER DOCUMENT, I.E.
COMPLIES WITH ALL CONDITIONS OF PARTICIPATION.
TENDER HAS BEEN LODGED ON TIME.
DOCUMENTS ARE SIGNED AS REQUIRED.
TENDER MEETS ALL MANDATORY REQUIREMENTS.

IF THE TENDER DOES NOT MEET THIS INITIAL CHECK, IT IS DEEMED AS NON-COMPLIANT AND WILL BE
EXCLUDED FROM FURTHER CONSIDERATION.

CRITERIAS FOR ANALYSIS

1. ABSURDLY HIGH / LOW RATES (RATES QUOTED FOR ITEMS SHALL BE WITH IN 25% RANGE OF ACTUAL
ESTIMATED RATES)
2. THE CAPABILITY OF YOUR BUSINESS TO FULFIL THE REQUIREMENT INCLUDING: TECHNICAL AND
MANAGEMENT COMPETENCE, FINANCIAL VIABILITY AND RELEVANT EXPERIENCE,
3. THE RELEVANT SKILLS, EXPERIENCE AND AVAILABILITY OF KEY PERSONNEL, QUALITY ASSURANCE
REQUIREMENTS.
4. THE RISKS OR CONSTRAINTS ASSOCIATED WITH OFFER.

6. E-TENDERING
E-TENDERING PROVIDES FOR TENDER DOCUMENTATION TO BE DISTRIBUTED TO TENDERERS VIA A
WEB-BASED SYSTEM AND ALLOWS TRANSMISSION OF AMENDMENTS TO DOCUMENTS AND TENDERERS'
QUERIES DURING THE TENDER PERIOD AND THE SUBMISSION OF THE FINAL BIDS.
IN OTHER WORDS, THE E-TENDERING PROCESS MEANS TRANSFORMATION FROM A TRADITIONAL
TENDERING

SYSTEM

TO

AN

ONLINE

PROCESS

MAKING

TRANSPARENCY, DATA STORAGE AND RETRIEVAL SYSTEMS.

HUGE

ADVANCES

IN

EFFICIENCY,

ADVANTAGES
1. TAKES LESS TIME AND HENCE FASTER AND RELIABLE
2. LESS PAPER WORK
3. ALTERATIONS OF DOCUMENT IS IMPOSSIBLE
4. NEITHER EMPLOYER NOR TENDERER CAN DENY SENDING / RECEIVING DOCUMENTS.
5. EASIER TO SCRUTINIZE AND COMPARE RATES ON INDIVIDUAL ITEM BASIS.

DISADVANTAGES
1. CARE SHOULD BE EMPHASISED TO PREVENT UNAUTHORISED ACCESS TO DOCUMENTS AND BIDS.

E-TENDERING - PROCESS

UNIT 2
1. CONTRACT DOCUMENT
1.1 ARTICLES OF AGREEMENT
1.2 TERMS & CONDITIONS

AN ARTICLE IS A MEMORANDUM(REGISTER) OR MINUTE OF AN AGREEMENT, REDUCED TO

WRITING

TO MAKE SOME FUTURE DISPOSITION OR MODIFICATION OF PROPERTY; AND

SUCH AN INSTRUMENT WILL CREATE A TRUST OR EQUITABLE STATE

THIS INSTRUMENT SHOULD CONTAIN

1 THE NAME AND CHARACTER OF THE PARTIES

2 THE SUBJECT-MATTER OF THE CONTRACTS
3 THE COVENANTS WHICH EACH OF THE PARTIES BIND THEMSELVES TO PERFORM
4, THE DATE
5, THE SIGNATURES OF THE PARTIES.

1.2 TERMS & CONDITIONS

CONTRACT TYPES BASED ON BID TYPES

1. LUMPSUM CONTRACT
2. ITEM RATE / UNIT RATE CONTRACT
1.2.1 MEASUREMENT
1.2.2 PAYMENT
1.2.3 PROJECT SCHEDULE
1.2.4 MOBILIZATION
1.2.5 HAZARDOUS MATERIALS (SITE SPECIFIC) HEALTH & SAFETY

1.2.6 TEMPORARY CONSTRUCTION FENCING

1.2.7 TEMPORARY CHAIN LINK FENCING
1.2.8 TRAFFIC CONTROL
1.2.9 OWNERS FIELD FACILITIES

2 ARBITRATION

ARBITRATION UTILIZES A NEUTRAL THIRD PARTY TO HEAR A DISPUTE BETWEEN PARTIES.

THE HEARING IS INFORMAL AND THE PARTIES MUTUALLY SELECT THE ARBITRATOR.
THE ARBITRATOR IS RETAINED TO DECIDE HOW TO SETTLE THE DISPUTE AND THE DECISION IS FINAL
AND BINDING ON THE PARTIES.
ARBITRATION IS MORE COST EFFICIENT AND QUICKER THAN LITIGATION BUT IT IS THE ARBITRATOR,
NOT THE PARTIES, WHO RENDERS THE TERMS AND CONDITIONS OF THE DISPUTE RESOLUTION

NECESSITY AND ADVANTAGES OF

ARBITRATION ACT

SHRINKING BOUNDARIES, FREE TRADE & INTERNATIONAL COMMERCE HAVE BECOME GLOBAL
NECESSITIES.

COMPETITION OFTEN LEADS TO CONFLICTS BETWEEN ENTREPRENEURS RESULTING IN COMMERCIAL

DISPUTES.

GROWING STRENGTH AND ROLE OF INDIA IN THE GLOBAL ECONOMY

INCREASING FDI AND OTHER FORMS OF COLLABORATION AND INCREASING DISPUTES BETWEEN
INDIAN AND FOREIGN PARTIES

QUICK REDRESSAL TO COMMERCIAL DISPUTES THROUGH PRIVATE ARBITRATION.

SETTLEMENT OF DISPUTE IN AN EXPEDITIOUS, CONVENIENT, INEXPENSIVE AND PRIVATE MANNER SO

THAT THEY DO NOT BECOME THE SUBJECT OF FUTURE LITIGATION BETWEEN THE PARTIES.

ARBITRATOR TYPES

PARTY - A
1.

SOLE ARBITRATOR
PARTY - B

PARTY - A
2.
PARTY - B

UMPIRE / CHAIRMAN
ARBITRATOR 1

JOINT ARBITRATORS /

ARBITRATOR 2

ARBITRAL TRIBUNAL

.
.
.

PARTY - A

ARBITRATOR - A

3.

PRESIDING ARBITRATOR
PARTY - B

ARBITRATOR - B

ROLE AND RESPONSIBILITIES

TO ACT FAIRLY AND IMPARTIALLY BETWEEN THE PARTIES, AND TO ALLOW EACH PARTY A
REASONABLE OPPORTUNITY TO PUT THEIR CASE AND TO DEAL WITH THE CASE OF THEIR OPPONENT
(SOMETIMES SHORTENED TO COMPLYING WITH THE RULES OF "NATURAL JUSTICE)
TO ADOPT PROCEDURES SUITABLE TO THE CIRCUMSTANCES OF THE PARTICULAR CASE, SO AS TO
PROVIDE A FAIR MEANS FOR RESOLUTION OF THE DISPUTE

APPOINTMENT OF ARBITRATOR

ANY PERSON CAN BE APPOINTED AS AN ARBITRATOR.

GENERALLY IMPARTIAL AND INDEPENDENT PERSONS

C AS, ENGINEERS, RETIRED JUDGES, ADVOCATES AND OTHER PROFESSIONALS ARE PREFERRED.

PARTIES ARE FREE TO DETERMINE THE NUMBER OF ARBITRATORS

NUMBER SHALL NOT BE AN EVEN NUMBER.

THE ARBITRATOR SHALL DISCLOSE IN WRITING TO THE PARTIES ANYTHING THAT MAY GIVE RISE TO

JUSTIFIABLE DOUBTS ABOUT HIS INDEPENDENCE OR IMPARTIALITY.

TERMINATION OF ARBITRATOR

CIRCUMSTANCES EXIST THAT GIVE RISE TO JUSTIFIABLE DOUBTS AS TO HIS INDEPENDENCE OR

IMPARTIALITY

HE DOES NOT POSSESS THE QUALIFICATIONS AGREED TO BY THE PARTIES.

ARBITRATION AWARD

AN ARBITRATION AWARD (OR ARBITRAL AWARD) IS ANALOGOUS TO A JUDGMENT IN A COURT OF LAW

THE DECISION OF ARBITRAL TRIBUNAL WILL BE BY MAJORITY

THE ARBITRAL AWARD SHALL BE IN WRITING AND SIGNED BY THE MEMBERS OF THE TRIBUNAL.

STATES THE REASONS FOR THE AWARD UNLESS THE PARTIES HAVE AGREED THAT NO REASON FOR

THE AWARD IS TO BE GIVEN.

THE AWARD SHOULD BE DATED AND PLACE WHERE IT IS MADE SHOULD BE MENTIONED.

COPY OF AWARD GIVEN TO EACH PARTY.

TRIBUNAL CAN MAKE INTERIM AWARD ALSO.

CONDUCT OF ARBITRAL PROCEEDINGS

THE ARBITRAL TRIBUNAL IS NOT BOUND BY CODE OF CIVIL PROCEDURE, 1908 OR INDIAN EVIDENCE
ACT, 1872.

THE PARTIES TO ARBITRATION ARE FREE TO AGREE ON THE PROCEDURE TO BE FOLLOWED BY THE
ARBITRAL TRIBUNAL.

LAW OF LIMITATION (1963) APPLICABLE

FLEXIBILITY IN RESPECT OF PROCEDURE, PLACE & LANGUAGE.

SUBMISSION OF STATEMENT OF CLAIM & DEFENSE MAYBE AMENDED/ SUPPLEMENTED AT ANY TIME

HEARINGS & WRITTEN PROCEEDINGS AT THE DISCRETION OF THE TRIBUNAL CAN BE ORAL AT THE
REQUEST OF EITHER PARTY

SETTLEMENTS DURING ARBITRATION

COST OF ARBITRATION

FEES

AND

EXPENSES

OF

ARBITRATORS

AND

WITNESSES,

LEGAL

FEES

AND

EXPENSES,

ADMINISTRATION FEES OF THE INSTITUTION SUPERVISING THE ARBITRATION AND OTHER EXPENSES.

TRIBUNAL CAN DECIDE THE COST AND SHARE OF EACH PARTY.

IF

PARTIES REFUSE TO PAY THE COSTS, THE ARBITRAL TRIBUNAL MAY REFUSE TO DELIVER ITS

AWARD; THUS ANY PARTY CAN APPROACH COURT.

THE COURT WILL ASK FOR DEPOSIT FROM THE PARTIES AND ON SUCH DEPOSIT, THE AWARD WILL BE
DELIVERED BY THE TRIBUNAL. THEN COURT WILL DECIDE THE COSTS OF ARBITRATION AND SHALL PAY
THE SAME TO ARBITRATORS. BALANCE, IF ANY, WILL BE REFUNDED TO THE PARTY.

ARBITRATION CLAUSE IN CONTRACT AGREEMENT

EXAMPLE
ANY DISPUTE OR DIFFERENCE ARISING OUT OF OR IN CONNECTION WITH THIS CONTRACT SHALL BE
DETERMINED BY THE APPOINTMENT OF A SINGLE ARBITRATOR TO BE AGREED BETWEEN THE PARTIES,

OR FAILING AGREEMENT WITHIN FOURTEEN DAYS, AFTER EITHER PARTY HAS GIVEN TO THE OTHER A
WRITTEN REQUEST TO CONCUR IN THE APPOINTMENT OF AN ARBITRATOR, BY AN ARBITRATOR TO BE
APPOINTED BY THE PRESIDENT OR A VICE PRESIDENT OF THE CHARTERED INSTITUTE OF
ARBITRATORS

UNIT 3
1. TURNKEY OFFER / PROJECT

A TURNKEY PROJECT REFERS TO A PROJECT IN WHICH CLIENTS PAY CONTRACTORS TO DESIGN AND
CONSTRUCT NEW FACILITIES AND SOME TIMES TO TRAIN PERSONNEL AS WELL.

EXAMPLE: INDUSTRIAL COMPANIES THAT SPECIALIZE IN COMPLEX PRODUCTION TECHNOLOGIES

NORMALLY USE TURNKEY PROJECTS AS AN ENTRY STRATEGY.

IN PROJECTS "TURNKEY" A CONTRACTOR AGREES TO DELIVER EVERY DETAIL OF THE PROJECT TO A

CLIENT, SOME TIMES INCLUDING THE TRAINING OF OPERATING PERSONNEL. UPON COMPLETION OF THE
CONTRACT, THE CLIENT RECEIVES THE "KEY" TO A PROJECT READY FOR ITS OVERALL PERFORMANCE.

DESIGN OF THE ENTIRE PROJECT TO ITS LAST DETAIL

THE SUPPLY OF MATERIALS AND MACHINERY TRANSPORT THEREOF.

THE COMPLETION OF CIVIL, FAADE, INTERIOR WORKS.

INSTALLATION AND ASSEMBLY, AND THE SET-UP AND OPERATION

OF THE PROPOSED WORK.

IN CERTAIN INSTANCES, IT IS ALSO POSSIBLE TO INCLUDE STAFF

TRAINING AND TECHNICAL ASSISTANCE.

TURN KEY PROJECT CHARACTERISTICS

THE TWO ESSENTIAL FEATURES OF THE CONTRACTS "TURNKEY
THE MERGER OF THE MISSIONS OF CONCEPTION AND EXECUTION OF THE WORK IN ONE PERSON.

THE OVERALL OBLIGATION ASSUMED BY THE CONTRACTOR TO THE CLIENT TO DELIVER A WORK
FULLY EQUIPPED AND IN PERFECT WORKING ORDER.

TURN KEY CONTRACT CHARACTERISTICS

THE CONTRACTOR ASSUMES THE DESIGN AND EXECUTION OF THE WORK SINCE IT INVOLVES
HOLDING ONE SINGLE CONTRACT MADE BETWEEN THE CLIENT AND THE CONTRACTOR.

GIVES THE CONTRACTOR THE RIGHT TO MAKE CHANGES IN THEIR PLANS, AT THEIR OWN COST AND
RISK.

SPECIAL CLAUSES (REQUIREMENTS) FOR TURNKEY OFFERS

INDETERMINACY OF THE OBJECT OF THE CONTRACT AT THE TIME OF AWARDING THE CONTRACT, WHICH
IS TO MEET STANDARDS THROUGHOUT THE COMPLETION OF PROJECT REQUEST FOR PROPOSAL
(DBRs)

RIGHTS GRANTED TO THE CONTRACTOR TO MODIFY THE PROJECT PROVIDED THAT IT IS INFORMED,
REVIEW OR APPROVE SUCH CHANGES, AND PROVIDED THAT SUCH AMENDMENTS DO NOT ALTER THE
TECHNICAL GUARANTEES AND GOOD WORK.

THE CONTRACTOR SHALL BE RESPONSIBLE FOR ANY POSSIBLE GAPS AND OMISSIONS THAT MAY VITIATE
THE PROJECT AND THE CLIENT'S RIGHTS.

TYPES OF TURN KEY OFFERS

BOT BUILD OPERATE & TRANSFER
BOOT BUILD OPERATE OWN & TRANSFER
BOLT BUILD OPERATE LEASE & TRANSFER
BOTT BUILD OPERATE TRAIN & TRANSFER
BOO BUILD OPERATE & OWN

UNIT IV
GLOBALIZATION

GLOBALIZATION (OR GLOBALISATION) IS THE PROCESS OF INTERNATIONAL INTEGRATION ARISING FROM

THE INTERCHANGE OF WORLD VIEWS, PRODUCTS, IDEAS, AND OTHER SOCIO ECONOMIC ASPECTS OF
CULTURE.

ECONOMIC GLOBALIZATION IS THE INCREASING ECONOMIC INTERDEPENDENCE OF NATIONAL

ECONOMIES ACROSS THE WORLD THROUGH A RAPID INCREASE IN CROSS-BORDER MOVEMENT OF
GOODS, SERVICE, TECHNOLOGY AND CAPITAL.
CHINESE ECONOMIC REFORMS 1980S PRODUCT CENTRIC
INDIAN ECONOMIC REFORMS 1991 SERVICE CENTRIC

ADVANTAGES

GDP GROWTH IN DEVELOPING COUNTRIES WILL BE HIGH (UP TO 10% IS POSSIBLE)

CONTROL OF IMMIGRATION
IMPROVED LIVING STANDARDS AND HEALTH CONDITIONS
LITERACY RATES INCREASE IN DEVELOPING NATIONS (CHILD LABOR IS REDUCED AS A CONSEQUENCE)
MILITARY COOPERATION BETWEEN COUNTRIES
ENVIRONMENTAL COOPERATION

DISADVANTAGES
SOCIAL DISINTEGRATION
BREAKDOWN OF DEMOCRACY
RAPID

AND

EXTENSIVE

DETERIORATION

ENVIRONMENT

THE SPREAD OF NEW DISEASES

INCREASING POVERTY

OF

THE

HARMNESS TO CULTURAL DIVERSITY

GATT & WTO

INTRODUCTION OF WTO & INDIA

WTO WAS FORMED ON 1ST JAN,1995.

IT TOOK OVER GATT (GENERAL AGREEMENT ON TARIFFS & TRADE). IN 8TH ROUND OF GATT,
POPULARLY KNOWN AS URUGUAY ROUND, MEMBER NATIONS OF GATT DECIDED TO SET UP A NEW
ORGANIZATION, WORLD TRADE ORGANIZATION IN PLACE OF GATT.

WTO Vs GATT
GATT

IT WAS AD HOC & PROVISIONAL.

IT HAD NO PROVISION FOR CREATING AN

WTO

IT IS PERMANENT.

IT HAS LEGAL BASIS BECAUSE MEMBER NATIONS

HAVE VERIFIED THE WTO AGREEMENTS.

ORGANIZATION.

MORE AUTHORITY THAN GATT.

IT DOESN'T ALLOW ANY CONTRADICTIONS IN

IT ALLOWED CONTRADICTIONS IN LOCAL LAW &

GATT AGREEMENTS.

LOCAL LAW .

OBJECTIVES OF WTO

THE PRIMARY AIM OF WTO IS TO IMPLEMENT THE NEW WORLD TRADE AGREEMENT.

TO PROMOTE MULTILATERAL TRADE .

TO PROMOTE FREE TRADE BY ABOLISHING TARIFF & NON-TARIFF BARRIERS.

TO ENHANCE COMPETITIVENESS AMONG ALL TRADING PARTNERS SO AS TO BENEFIT

CONSUMERS.

TO INCREASE THE LEVEL OF PRODUCTION & PRODUCTIVITY WITH A VIEW TO INCREASE THE
LEVEL OF EMPLOYMENT IN THE WORLD.

TO EXPAND & UTILISE WORLD RESOURCES IN THE MOST OPTIMUM MANNER.

TO IMPROVE THE LEVEL OF LIVING FOR THE GLOBAL POPULATION & SPEED UP ECONOMIC
DEVELOPMENT OF THE MEMBER NATIONS.

TO TAKE SPECIAL STEPS FOR THE DEVELOPMENT OF POOREST NATIONS.

PRINCIPLES OF WTO

NON DISCRIMINATION

RECIPROCITY (MUTUAL BENEFITS)

BINDING AND ENFORCEABLE COMMITMENTS

TRANSPARENCY

SAFETY VALUES

WTO AGREEMENTS

GATS
BANKS, INSURANCE FIRMS, TELECOMMUNICATIONS COMPANIES, TOUR OPERATORS, HOTEL CHAINS AND
TRANSPORT COMPANIES LOOKING TO DO BUSINESS ABROAD CAN NOW ENJOY THE SAME PRINCIPLES OF
FREER AND FAIRER TRADE THAT ORIGINALLY ONLY APPLIED TO TRADE IN GOODS.
THESE PRINCIPLES APPEAR IN THE NEW GENERAL AGREEMENT ON TRADE IN SERVICES (GATS).

TRIPs
THE WTOS INTELLECTUAL PROPERTY AGREEMENT AMOUNTS TO RULES FOR TRADE AND INVESTMENT IN
IDEAS AND CREATIVITY. THE RULES STATE HOW COPYRIGHTS, PATENTS, TRADEMARKS, GEOGRAPHICAL
NAMES USED TO IDENTIFY PRODUCTS, INDUSTRIAL DESIGNS, INTEGRATED CIRCUIT LAYOUT-DESIGNS AND
UNDISCLOSED INFORMATION SUCH AS TRADE SECRETS INTELLECTUAL PROPERTY SHOULD BE

PROTECTED WHEN TRADE IS INVOLVED. IN NUTSHELL .

DISPUTE SETTLEMENT SYSTEM

THE WTOS PROCEDURE FOR RESOLVING TRADE QUARRELS UNDER THE DISPUTE SETTLEMENT

UNDERSTANDING IS VITAL FOR ENFORCING THE RULES AND THEREFORE FOR ENSURING THAT TRADE
FLOWS SMOOTHLY. COUNTRIES BRING DISPUTES TO THE WTO IF THEY THINK THEIR RIGHTS UNDER THE
AGREEMENTS ARE BEING INFRINGED. JUDGEMENTS BY SPECIALLY-APPOINTED INDEPENDENT EXPERTS
ARE BASED ON INTERPRETATIONS OF THE AGREEMENTS AND INDIVIDUAL COUNTRIES COMMITMENTS.

TPRM
THE TRADE POLICY REVIEW MECHANISMS PURPOSE IS TO IMPROVE TRANSPARENCY, TO CREATE A
GREATER UNDERSTANDING OF THE POLICIES THAT COUNTRIES ARE ADOPTING, AND TO ASSESS THEIR
IMPACT. MANY MEMBERS ALSO SEE THE REVIEWS AS CONSTRUCTIVE FEEDBACK ON THEIR POLICIES.

ALL WTO MEMBERS MUST UNDERGO PERIODIC SCRUTINY, EACH REVIEW CONTAINING REPORTS BY THE
COUNTRY CONCERNED AND THE WTO SECRETARIAT.

IMPACT OF FOREIGN ARCHITECTS ON PROFESSIONAL PRACTICE

ASSIGNMENT - 1
INFRASTRUCTURE & PREREQUISITES FOR PRACTICE IN ABROAD
ASSIGNMENT - 2
IN UNITED KINGDOM
MIDDLE EAST
UNITED STATES
AUSTRALIA

UNIT V
EMERGING SPECIALISATIONS FOR AN ARCHITECT
1.

PROJECT MANAGEMENT

PROJECT

PROJECT MANAGEMENT CONCEPT MANAGEMENT OF CHANGE

PROJECT MANAGEMENT

PLANNING,

DIRECTING,

AND

CONTROLLING

RESOURCES

(PEOPLE,

EQUIPMENT,

MATERIAL) TO MEET THE TECHNICAL, COST, AND TIME CONSTRAINTS OF THE PROJECT.

PROJECT / CONSTRUCTION MANAGEMENT DIFFERENCE

GENERALLY IT TALKS ABOUT THE DIFFERENCE IN LEVEL OF AUTHORITY AND SCALE OF OBJECTIVES

PROJECT MANAGER

PROJECT PLANNING

1. DEFINING PROJECT AND FRAMING OBJECTIVES

IDENTIFY PROJECT SCOPE

FRAME THE TARGETS AND ITS COSTS

OBJECTIVES SHALL ALWAYS BE SPECIFIC MEASURABLE ATTAINABLE RELEVANT AND TIME

BASED.
2. IDENTIFYING ACTIVITIES AND ALLOCATING RESOURCES SCHEDULING
KEY ACTIVITIES (WBS WORK BREAK DOWN STRUCTURE)
IDENTIFY APPROPRIATE RESOURCES TO PERFORM KEY ACTIVITIES AT APPROPRIATE TIME

NETWORK DIAGRAM 2 TYPES

ACTIVITY ON NODE (AON)

USED IN CPM
ACTIVITY ON ARC (AOA)
USED IN PERT

3. MONITORING & CONTROLLING

GANTTS CHART

PERFORMANCE
- UNEXPECTED TECHNICAL PROBLEMS ARISE
- INSUFFICIENT RESOURCES ARE UNAVAILABLE WHEN NEEDED
- QUALITY OR RELIABILITY PROBLEMS OCCUR
- OWNER/CLIENT REQUIRES CHANGES IN TECHNICAL SPECIFICATIONS
- INTER-FUNCTIONAL COMPLICATIONS AND CONFLICTS ARISE
- MARKET CHANGES THAT INCREASE/DECREASE THE PROJECTS VALUE
COST
- TECHNICAL DIFFICULTIES THAT REQUIRE MORE RESOURCES
- SCOPE OF WORK INCREASES
- BID AMOUNT (ACCEPTED FOR THE CONTRACT AWARD) IS TOO LOW
- REPORTING OF THE MONITORING RESULTS ARE POOR/LATE
- PROJECT BUDGETING FOR CONTRACTOR CASH FLOWS NOT DONE RIGHT
- CHANGES IN MARKET PRICES OF THE INPUTS

TIME
- TECHNICAL DIFFICULTIES REQUIRE MORE TIME TO SOLVE
- SCOPE OF WORK INCREASES
- UNEXPECTED UTILITIES NEEDING RELOCATION
- TASK SEQUENCING NOT DONE RIGHT
- REQUIRED MATERIAL, LABOR/EQUIPMENT UNAVAILABLE WHEN NEEDED
- KEY PRECEDING TASKS WERE NOT COMPLETED ON TIME.

HOW TO CONTROL ?

FEEDBACK PROCESS ADD / SUBTRACT PARAMETERS TO MEET OBJECTIVES

(COMPONENT(S) OF VARIABLES) TO ATTAIN THE PROJECT GOAL

MONITORING MECHANISM (E.G.

SUPERVISING / SCRUTINY)

Inputs

Process
Effector
and
Decisionmaker

Outputs

Comparator
Standards
Consciousness Memory, Selection

4.

CLOSING OUT REPORT

PREPARE CLOSE OUT REPORT AND DOCUMENT THE PROJECT PROGFRESS INCLUDING
ALL RELEVANT CONTROL MEASURES MADE TO MEET THE PROJECT OBJECTIVES

THIS WILL ACT AS KNOWLEDGE / EXPERIENCE GAINED FOR SIMILLAR FUTURE PROJECTS
ROLE OF A PROJECT MANAGER
A PROJECT MANAGER IS A KEY FIGURE OF ANY SERVICE TEAM. THEY WILL BE
PRIMARILY RESPONSIBLE FOR THE OVERALL SUCCESSFULNESS OF DELIVERING A
PROJECT, REACHING SET TARGETS BOTH SAFELY AND CORRECTLY
THEY MUST BE ABLE TO PERFORM EFFECTIVELY WITHIN TIGHT TIME-SCALES, KEEP
WITHIN STRICT BUDGETS AND CREATE A POSITIVE CLIENT ENVIRONMENT SUCH THAT
CLIENTS BECOME/REMAIN IN A GOOD RELATIONSHIP THROUGHOUT THE CONTRACT.
A PM WILL BE EXPECTED TO SUPPORT THE DEVELOPMENT OF THE LEADERSHIP, BOTH
ON-SITE AND BACK IN THE OFFICES. THEY WILL NEED TO ORGANISE THE BEST TEAM
POSSIBLE TO COMPLETE THE PROJECT, WHILST TRAINING AND TEACHING THE
EMPLOYEES TOWARDS THE COMPANIES CORE VALUES

RESPONSIBILITIES OF A PROJECT MANAGER

PLAN THE DELIVERY OF THE PROJECT AT HAND.

MANAGE THE DAY-TO-DAY WORKING, UTILISATION, IMPLEMENTATION AND TECHNICAL
CONSULTANTS ENGAGED ON CLIENT ASSIGNMENTS. FROM ENSURING THE CORRECT
MATERIAL TURNS UP BEFORE A JOB, TO EXPLAINING THE WORK ETHICS AND ACTIVITIES
TO COLLEAGUES.
REPORT PROGRESS ON PROJECTS BY SUITABLE MEDIA TO SECTOR MANAGEMENT,
MAINTAIN

AND

UPDATE

PROJECT

REPORTING,

CHECKPOINTS

AND

FINANCIAL

REPORTING TO A HIGH STANDARD.

PLAN AND ARRANGE VISITS TO EXISTING AND NEW POTENTIAL CLIENTS, ENSURING
EVERY CLIENT RECEIVES SUFFICIENT SUPPORT TO ENHANCE THEIR RELATIONSHIPS.

DEVELOP CONTACTS WITH SENIOR STAFF, DIRECTORS, AND OTHER INFLUENTIAL

STAFF WITHIN EACH ACCOUNT DURING THE IMPLEMENTATION PHASE
.

 CO-ORDINATE REQUIRED SUPPORT LEVELS AND TRAINING.

PRODUCE REPORTS ON EACH PROJECT AT AGREED INTERVALS, AND WHENEVER
NECESSARY ACTIONS ARE REQUIRED.

SINCE AN ARCHITECT WILL NATURALLY HAVE ALL THE SKILLS NECESSARY TO PERFORM
THE TASK OF A PROJECT MANAGER (OVER ALL VISION ABOUT THE PROJECT), HE IS
MORE SUITABLE FOR THIS SPECIALISATION.
PROJECT EVALUATION & REVIEW TECHNIQUES (PERT)
COMPLEX PROJECTS REQUIRE A SERIES OF ACTIVITIES, SOME OF WHICH MUST BE
PERFORMED SEQUENTIALLY AND OTHERS THAT CAN BE PERFORMED IN PARALLEL WITH
OTHER ACTIVITIES. THIS COLLECTION OF SERIES AND PARALLEL TASKS CAN BE MODELED
AS A NETWORK.
THE PROGRAM EVALUATION AND REVIEW TECHNIQUE (PERT) IS A NETWORK MODEL THAT
ALLOWS FOR RANDOMNESS IN ACTIVITY COMPLETION TIMES. PERT WAS DEVELOPED IN
THE LATE 1950'S FOR THE U.S. NAVY'S POLARIS PROJECT HAVING THOUSANDS OF
CONTRACTORS.
IT HAS THE POTENTIAL TO REDUCE BOTH THE TIME AND COST REQUIRED TO COMPLETE A
PROJECT.

RULES
IN A PROJECT, AN ACTIVITY IS A TASK THAT MUST BE PERFORMED AND AN EVENT IS A
MILESTONE MARKING THE COMPLETION OF ONE OR MORE ACTIVITIES.
BEFORE AN ACTIVITY CAN BEGIN, ALL OF ITS PREDECESSOR ACTIVITIES MUST BE
COMPLETED.

PROJECT NETWORK MODELS REPRESENT ACTIVITIES AND MILESTONES BY ARCS AND

NODES. PERT IS AN ACTIVITY ON ARC NETWORK, IN WHICH THE ACTIVITIES ARE
REPRESENTED ON THE LINES AND MILESTONES ON THE NODES.
ACTIVITY

EVENT

REPRESENTATION OF ACTIVITY &

EVENT IN A TYPICAL NETWORK
DIAGRAM

GENERAL GUIDELINES
1.

ARROWS INDICATE LOGICAL PRECEDENCE.

2.

FLOW OF THE DIAGRAM IS FROM LEFT TO

RIGHT.

3.

ARROWS SHOULD NOT INTERSECT.

4.

DANGLING SHOULD BE AVOIDED.

ONLY ONE ACTIVITY SHALL BE DRAWN BETWEEN TWO EVENTS

In many instances requires the addition of a Dummy

Activity to clarify the precedence relationships

between

the two activities. It is a zero time

activity and consumes no resources.

Dummy Activity is used in two situations

1)

2)

When two or more activities start and end at

the same nodes

When two or more activities share the same

1
2

precedence activity but not all the precedence are

shared.

TYPICAL PERT NETWORK DIAGRAM

WITH TIME

THE MILESTONES GENERALLY ARE NUMBERED SO THAT THE ENDING NODE OF AN

ACTIVITY HAS A HIGHER NUMBER THAN THE BEGINNING NODE. INCREMENTING THE
NUMBERS BY 10 ALLOWS FOR NEW ONES TO BE INSERTED WITHOUT MODIFYING THE
NUMBERING OF THE ENTIRE DIAGRAM. THE ACTIVITIES IN THE ABOVE DIAGRAM ARE
LABELED WITH LETTERS ALONG WITH THE EXPECTED TIME REQUIRED TO COMPLETE THE
ACTIVITY.

PERT PLANNING INVOLVES THE FOLLOWING STEPS:

1. IDENTIFY THE SPECIFIC ACTIVITIES AND MILESTONES.
2. DETERMINE THE PROPER SEQUENCE OF THE ACTIVITIES.
3. CONSTRUCT A NETWORK DIAGRAM.
4. ESTIMATE THE TIME REQUIRED FOR EACH ACTIVITY.
5. DETERMINE THE CRITICAL PATH.
6. UPDATE THE PERT CHART AS THE PROJECT PROGRESSES.
1. IDENTIFY ACTIVITIES AND MILESTONES
THE ACTIVITIES ARE THE TASKS REQUIRED TO COMPLETE THE PROJECT. THE MILESTONES
ARE THE EVENTS MARKING THE BEGINNING AND END OF ONE OR MORE ACTIVITIES. IT IS
HELPFUL TO LIST THE TASKS IN A TABLE THAT IN LATER STEPS CAN BE EXPANDED TO
INCLUDE INFORMATION ON SEQUENCE AND DURATION.
2. DETERMINE ACTIVITY SEQUENCE
THIS STEP MAY BE COMBINED WITH THE ACTIVITY IDENTIFICATION STEP SINCE THE ACTIVITY
SEQUENCE IS EVIDENT FOR SOME TASKS. OTHER TASKS MAY REQUIRE MORE ANALYSIS TO
DETERMINE THE EXACT ORDER IN WHICH THEY MUST BE PERFORMED.

3. CONSTRUCT THE NETWORK DIAGRAM

USING THE ACTIVITY SEQUENCE INFORMATION, A NETWORK DIAGRAM CAN BE DRAWN

SHOWING THE SEQUENCE OF THE SERIAL AND PARALLEL ACTIVITIES. FOR THE ORIGINAL
ACTIVITY-ON-ARC MODEL, THE ACTIVITIES ARE DEPICTED BY ARROWED LINES AND
MILESTONES ARE DEPICTED BY CIRCLES OR "BUBBLES".

IF DONE MANUALLY, SEVERAL DRAFTS MAY BE REQUIRED TO CORRECTLY PORTRAY THE

RELATIONSHIPS AMONG ACTIVITIES. SOFTWARE PACKAGES SIMPLIFY THIS STEP BY
AUTOMATICALLY CONVERTING TABULAR ACTIVITY INFORMATION INTO A NETWORK
DIAGRAM. (MS PROJECT, PRIMAVERA)
4. ESTIMATE ACTIVITY TIMES
WEEKS ARE A COMMONLY USED UNIT OF TIME FOR ACTIVITY COMPLETION, BUT ANY
CONSISTENT UNIT OF TIME CAN BE USED.
A DISTINGUISHING FEATURE OF PERT IS ITS ABILITY TO DEAL WITH UNCERTAINTY IN
ACTIVITY COMPLETION TIMES. FOR EACH ACTIVITY, THE MODEL USUALLY INCLUDES THREE

TIME ESTIMATES
OPTIMISTIC TIME - GENERALLY THE SHORTEST TIME IN WHICH THE ACTIVITY CAN BE
COMPLETED

IT IS COMMON PRACTICE TO SPECIFY OPTIMISTIC TIMES TO BE THREE STANDARD

DEVIATIONS FROM THE MEAN SO THAT THERE IS APPROXIMATELY A 1% CHANCE THAT THE
ACTIVITY WILL BE COMPLETED WITHIN THE OPTIMISTIC TIME.
MOST LIKELY TIME - THE COMPLETION TIME HAVING THE HIGHEST PROBABILITY. NOTE
THAT THIS TIME IS DIFFERENT FROM THE EXPECTED TIME.
PESSIMISTIC TIME - THE LONGEST TIME THAT AN ACTIVITY MIGHT REQUIRE. THREE
STANDARD DEVIATIONS FROM THE MEAN IS COMMONLY USED FOR THE PESSIMISTIC
TIME.
PERT ASSUMES A BETA PROBABILITY DISTRIBUTION FOR THE TIME ESTIMATES. FOR A BETA
DISTRIBUTION, THE EXPECTED TIME FOR EACH ACTIVITY CAN BE APPROXIMATED USING THE
FOLLOWING WEIGHTED AVERAGE:

EXPECTED TIME = ( OPTIMISTIC + 4 X MOST LIKELY + PESSIMISTIC ) / 6

THIS EXPECTED TIME MAY BE DISPLAYED ON THE NETWORK DIAGRAM.

TO CALCULATE THE VARIANCE FOR EACH ACTIVITY COMPLETION TIME, IF THREE STANDARD
DEVIATION TIMES WERE SELECTED FOR THE OPTIMISTIC AND PESSIMISTIC TIMES, THEN
THERE ARE SIX STANDARD DEVIATIONS BETWEEN THEM, SO THE VARIANCE IS GIVEN BY:
[ ( PESSIMISTIC - OPTIMISTIC ) / 6 ]2

5. DETERMINE THE CRITICAL PATH

THE CRITICAL PATH IS DETERMINED BY ADDING THE TIMES FOR THE ACTIVITIES IN EACH
SEQUENCE AND DETERMINING THE LONGEST PATH IN THE PROJECT. THE CRITICAL PATH
DETERMINES THE TOTAL CALENDAR TIME REQUIRED FOR THE PROJECT. IF ACTIVITIES
OUTSIDE THE CRITICAL PATH SPEED UP OR SLOW DOWN (WITHIN LIMITS), THE TOTAL
PROJECT TIME DOES NOT CHANGE. THE AMOUNT OF TIME THAT A NON-CRITICAL PATH
ACTIVITY CAN BE DELAYED WITHOUT DELAYING THE PROJECT IS REFERRED TO AS SLACK
TIME.

IF THE CRITICAL PATH IS NOT IMMEDIATELY OBVIOUS, IT MAY BE HELPFUL TO DETERMINE

THE FOLLOWING FOUR QUANTITIES FOR EACH ACTIVITY:

ES - EARLIEST START TIME

EF - EARLIEST FINISH TIME
LS - LATEST START TIME
LF - LATEST FINISH TIME

THESE TIMES ARE CALCULATED USING THE EXPECTED TIME FOR THE RELEVANT
ACTIVITIES. THE EARLIEST START AND FINISH TIMES OF EACH ACTIVITY ARE DETERMINED
BY WORKING FORWARD THROUGH THE NETWORK AND DETERMINING THE EARLIEST TIME
AT WHICH AN ACTIVITY CAN START AND FINISH CONSIDERING ITS PREDECESSOR
ACTIVITIES.

THE LATEST START AND FINISH TIMES ARE THE LATEST TIMES THAT AN ACTIVITY CAN START
AND FINISH WITHOUT DELAYING THE PROJECT. LS AND LF ARE FOUND BY WORKING
BACKWARD THROUGH THE NETWORK.

THE DIFFERENCE IN THE LATEST AND EARLIEST FINISH OF EACH ACTIVITY IS THAT
ACTIVITY'S SLACK. THE CRITICAL PATH THEN IS THE PATH THROUGH THE NETWORK IN
WHICH NONE OF THE ACTIVITIES HAVE SLACK.
SINCE THE CRITICAL PATH DETERMINES THE COMPLETION DATE OF THE PROJECT, THE
PROJECT CAN BE ACCELERATED BY ADDING THE RESOURCES REQUIRED TO DECREASE
THE TIME FOR THE ACTIVITIES IN THE CRITICAL PATH. SUCH A SHORTENING OF THE
PROJECT SOMETIMES IS REFERRED TO AS PROJECT CRASHING.

6. UPDATE AS PROJECT PROGRESSES

MAKE ADJUSTMENTS IN THE PERT CHART AS THE PROJECT PROGRESSES. AS THE PROJECT
UNFOLDS, THE ESTIMATED TIMES CAN BE REPLACED WITH ACTUAL TIMES. IN CASES
WHERE THERE ARE DELAYS, ADDITIONAL RESOURCES MAY BE NEEDED TO STAY ON

SCHEDULE AND THE PERT CHART MAY BE MODIFIED TO REFLECT THE NEW SITUATION.

BENEFITS OF PERT

PERT IS USEFUL BECAUSE IT PROVIDES THE FOLLOWING INFORMATION:

EXPECTED PROJECT COMPLETION TIME.
PROBABILITY OF COMPLETION BEFORE A SPECIFIED DATE.
THE CRITICAL PATH ACTIVITIES THAT DIRECTLY IMPACT THE COMPLETION TIME.
THE ACTIVITIES THAT HAVE SLACK TIME AND THAT CAN LEND RESOURCES TO CRITICAL
PATH ACTIVITIES.
ACTIVITY START AND END DATES.

LIMITATIONS

THE ACTIVITY TIME ESTIMATES ARE SOMEWHAT SUBJECTIVE AND DEPEND ON JUDGEMENT.
IN CASES WHERE THERE IS LITTLE EXPERIENCE IN PERFORMING AN ACTIVITY, THE NUMBERS
MAY BE ONLY A GUESS. IN OTHER CASES, IF THE PERSON OR GROUP PERFORMING THE
ACTIVITY ESTIMATES THE TIME THERE MAY BE BIAS IN THE ESTIMATE.
EVEN IF THE ACTIVITY TIMES ARE WELL-ESTIMATED, PERT ASSUMES A BETA DISTRIBUTION
FOR THESE TIME ESTIMATES, BUT THE ACTUAL DISTRIBUTION MAY BE DIFFERENT.
EVEN IF THE BETA DISTRIBUTION ASSUMPTION HOLDS, PERT ASSUMES THAT THE
PROBABILITY DISTRIBUTION OF THE PROJECT COMPLETION TIME IS THE SAME AS THE THAT
OF THE CRITICAL PATH.
BECAUSE OTHER PATHS CAN BECOME THE CRITICAL PATH IF THEIR ASSOCIATED ACTIVITIES
ARE

DELAYED,

PERT

CONSISTENTLY

UNDERESTIMATES

THE

EXPECTED

PROJECT

COMPLETION TIME.
THE UNDERESTIMATION OF THE PROJECT COMPLETION TIME DUE TO ALTERNATE PATHS
BECOMING CRITICAL IS PERHAPS THE MOST SERIOUS OF THESE ISSUES. TO OVERCOME THIS

LIMITATION, MONTE CARLO SIMULATIONS CAN BE PERFORMED ON THE NETWORK TO

ELIMINATE THIS OPTIMISTIC BIAS IN THE EXPECTED PROJECT COMPLETION TIME.