Reference no: EM13862703

Part A- ADMINISTRATION OF CONTRACTS

1.1 Given that the tender exceeds the Principal's budget you contact the ELECTRICAL Consultant to investigate whether or not there are cheaper plant items that can achieve the project objectives. Should any tenderer be involved in this process as they may have some good ideas to reduce the gap between tender and budget?

Give at least two reasons for your choice.

1.2 Your Electrical consultant advises that existing mixers can be fitted with reconditioned electric motors to give a net saving on the tender schedule of $28,400.

Write a brief email, of no more than 150 words, to the tenderers explaining how you wish to change the scope of the tender and reduce the tender amount by $28,400.

State any legal basis for your plan of action.

1.3 You have assessed the 8 tags from LMN Ltd and 12 of the 20 Tags from PPK Ltd and feel that these tags can be accepted without any issue. Eight (8) remaining tags from PPK Ltd tags are minor and should be able to be negotiated at a pre-contract meeting. However, the remaining three(3) major tags from ZXK Ltd relate to contract duration and to get these settled the Principal might need to extend the contract period from seven (7) weeks, as specified in the tender document, to twelve (12) weeks.

You are to recommend one of these tenderers to your client.

Write a letter not exceeding 150 words recommending one of the three tenderers to your client and explain your reasons for this recommendation

Write a draft letter, of no more than 250 words (one page), which invites your recommended tenderer to a pre-contract meeting. In the letter you will need to give some indication as to how the tags will be dealt with. You will also need to provide an agenda for the meeting, which is to be attached to the letter.

1.4 The pre-contract meeting and resolution of the major tags was successful. LMN Ltd now agrees to submit a revised tender of $333,776 + GST ( LMN Ltd agreed to the reduction in scope of this tender). The Principal has also agreed to extend the contract period to twelve (12) weeks.

Write a brief letter, on behalf of XYZ Ltd, of no more than 160 words, to LMN Ltd accepting the revised tender amount with the revised contract period.

Part B- PROCESSING PAYMENT CLAIMS

In a continuation of the treatment plants upgrade scenario, physical works get underway in mid April 2004.

2.1 You receive the first claim from LMN Ltd on 1 May 2004. At the pre-contract meeting you had asked LMN Ltd to give you a cashflow forecast (this was recorded in the minutes of the meeting). LMN Ltd has failed to provide this forecast. In your opinion LMN Ltd has
completed 5%-10% of the contract. LMN Ltd's claim is $38,000 + GST and is made under the Construction Contracts Act 2002 and General Conditions of Contract NZS 3910.2003. No specific terms for payment were agreed at the pre-contract meeting.

How much do you think LMN Ltd should be paid? What are your reasons for this view?

Outline the process of payment claims and payment schedules with the various time limits clearly stated (you may use a flow chart diagram if you wish).

2.2 You receive the fourth claim for payment from LMN Ltd on Monday 3 October 2004 for $42,990 + GST. So far you have spent $286,00 of the $333,776 agreed contract price.

However, you are aware that XYZ Ltd has been to LMN Ltd directly and that there may be approximately $10,000 of unapproved variation.

You discuss the fourth claim with the Principal. They tell you to pay the claim, so you
prepare a payment schedule which you send to both LMN Ltd and XYZ Ltd on Friday 21 October 2004

Are you within the legal time limit given in NZS3910:2003? Justify your answer.

XYZ Ltd now has five (5) working days to pay LMN Ltd - Yes or No?

2.3 In this period, after three (3) days, the Principal notices that LMN Ltd has claimed for the same turbidity meter twice (value $7,000). The Principal refuses to pay twice for the same item and tells you to deduct $7000 from this payment.

Can the Principal or the Engineer to Contract do this? Provide your reasoning.

Part C- EXTENSION OF TIME CLAIMS

3.1 The contract physical works commenced in mid April 2004 and by mid May 2004 LMN Ltd had commenced earthworks around both the settlement pond and the treatment plant building. In late May 2004 your engineer's representative tells you that he has had to warn the LMN Ltd about leaving the earthworks site in a mess over the last two weekends and that the earthworks subcontractor appears to be ignoring Environmental Management Plan and Quality Plan that all parties had agreed to at the pre-contract meeting seven (7) weeks ago.

That weekend it rains heavily and the exposed site floods and turns to mud. The subcontractor is unable to work for a week until the mud dries out. Two days after this weekend LMN Ltd asks for one week Extension of Time ("EOT') and indicates that it may want a variation to get rid of the dried mud.

Write a note, of no more than 160 words, as to how the Principal and Engineer should respond to the EOT request. Quote the relevant clauses of NZS 3910:2003 in support of your response. Also indicate whether you agree with the variation (you do not need to provide reasons for your decision).

3.2 Later in the contract period (July 2004) LMN Ltd is undertaking its specialty work, such as computer controls, electrical work and the installation of flow meters. Given its expertise LMN Ltd has made up for the time lost in May 2004.

The Principal then thinks it would be a good idea to put in duplicate electronic control panels to allow for a future upgrade to the plant.

LMN Ltd says it can do this extra work as an approved variation for an additional $10,000 but is not keen to commit to a fixed duration. However, LMN Ltd would agree to the contract finish date being extended for another six (6) weeks. The Principal agrees to the $10,000,
but given that the first electronic control panel installation only took one (1) week, the Principal believes LMN Ltd should only get an EOT of one (1) week or two (2) weeks maximum.

Can you make LMN Ltd do the variation for a one (1) or two (2) week EOT? Explain your reasons referring to NZS 3910:2003.

Can LMN Ltd decide to reject this request for a variation and not be penalised? Explain your answer, with reference to NZS 3910:2003.