PAPER 2: This is an open book paper.
Answer all questions
Total marks for this paper - 100 marks
Time allowed for Paper 2 - 3 hours
Pass mark for the examination - 55% per paper with an average of 60% for the two papers combined.
a. Only material listed as Suggested Reading Material for this examination will be allowed in the examination room.
No hand written notes are allowed in the exam venue or in any of the reference material.
b. Applicants must mark the annexures to the paper (attached to the back of the question paper) clearly with their details and insert it in the front of the examination book, before handing the book in.
PAPER 2 – PPE 18 September 2013 Page 1 of 13
All the questions for this examination Paper 2, have been based on the following, single project scenario, in order to simulate a realistic contract environment in which to test the candidates’ knowledge and understanding of contractual matters. It is therefore imperative that the candidate first reads the scenario with great care and ensures it is understood:
NOTES:
1. All names used are fictitious and any resemblance to actual company name, is purely coincidental.
2. Use all the provided documents and forms.
3. All given amounts exclude VAT
Scenario:
You have been appointed by Eternal Health Group Pty Ltd, as the Architect, Principal Consultant and Principal Agent for a new concrete framed and brick infill 80 Bed Psychiatric Unit and a new 22 station Renal Dialysis Unit, to be added onto an existing and fully operational 220 bed acute hospital. In addition, the area presently occupied by the existing Renal Dialysis Unit, will be altered to become the new Administration Wing.
The existing hospital measures 11966m2 under roof and is located on ERF 595, Glen Austin Midrand, land being in extent of 96000m2.
CONTRACT DATA
1. CONTRACTING AND OTHER PARTIES:
1.1 Employer:
Eternal Health Group Pty Ltd
Private Bag X22
Bellrose 2010
Tel 011300 0000
Fax 011300 0001
VAT Registration No 477635 9785
79 Malcolm Lane, Sandown, 2008
1.2 Architect, Principal Consultant and Principal Agent (PA)
GR8 Architects Pty Ltd
PO Box 9821 Willowdale 1975
Tel 011657 2863
Fax 086615 0239
1.3 Project Quantity Surveyor (PQS)
Quantum Quantity Surveyors cc
PO Box 1121 Lakehill 2945
Tel 011080 9512
Fax 011080 6398
1.4 A Structural and Civil Engineer (whom has performed a Geotechnical Analysis)
LSM Structural Engineers
PO Box 21 Hilldale 0193
Tel 012942 3247
Fax 012942 3945
Email admin@ lsme.com
1.5 A Mechanical Consultant
Meccon Mechanical Engineers
PO Box 394 The Lakes 1176
Tel 011133 9512
Fax 011133 6357
1.6 An Electrical Consultant
Voltere Electrical and Electronics Engineers
PO Box 25974 Meadows 0684
Tel 011987 1268
Fax 011987 8542
1.7 A Land Surveyor
Measurewell Land Surveyors
PO Box 14 Parklane 1118
Tel 011445 9865
Fax 011445 9872
None of the above professional team members have any interests in the project.
The client did not agree to the appointments of a Wet Services Consultant nor a Fire Consultant, claiming that you, as the Architect, should be sufficiently knowledgeable of the latest Wet Service and Fire Protection requirements.
2. ALL OTHER RELEVANT CONTRACT, SITE, INSURANCE, COMPLETION, DOCUMENTS AND CHANGES INFORMATION
The following other contract information is available:
2.1 The tender was a public tender by means of a With Bills of Quantities;
Three specific tender conditions were:
a. Tenderers must allow in their preliminaries an amount towards afterhours work
b. Tenderers must have a BEEE rating of 4 or lower
c. Tenderers must be registered as VAT vendors with SARS (the South African Revenue Services)
2.2 The Site Possession Date is 01 September 2013 and the Principal Contractor may commence with the work immediately upon taking possession.
2.3 Practical Completion as a whole will be required on 15 July 2014.
2.4 The Contract Period is therefore 221 Working Days.
2.5 The penalty amount for not achieving Completion on the above dates, amounts to R10 000.00 / day.
2.6 The entire existing hospital will be off limits to any contractors.
2.7 The Employer will furnish a Payment Guarantee.
2.8 Only water and electricity for the works will be provided by the Employer at no expense to the contractors.
2.9 All existing vegetation within the footprint of the new buildings, must be cleared.
2.10 The Contractor must effect Contract Works Insurance for the sum of R40000000.00 with a deductible of R 125,000.00, but the Employer will effect Public Liability Insurance for the amount of R 15000000.00 and a deductible of R75000.00. No Supplementary or Special Insurances are required.
2.11 The Contractor will be issued with 5 copies of documents free of charge.
2.12 The Bills of Quantities may not be used as a specification.
2.13 The Contractor must provide a Schedule of Rates.
2.14 No changes have been made to the JBCC agreement provisions.
2.15 The Contractor must submit the priced document to the QS within 3 days from taking possession of the Site.
2.16 The wiring of the IT installation will be undertaken directly by the Employers in-house IT Department and although not being employed as a Subcontractor by the Principal Contractor, the Principal Contractor will have to afford the Employers IT Department all reasonable access to the Works, in order to perform the data wiring prior to Practical Completion.
2.17 On completion, the Contractor must furnish Operating Manuals for
2.17.1 The Electrical Installation
2.17.2 The HVAC Installation
2.17.3 The Sanitary Ware
2.18 The last date for issuing Payment Certificates is the 25th of every month.
2.19 The Notice to Tenderers in the tender documents, stated that the lowest or any tender will not necessarily be accepted.
2.20 CPAP was not used
3. SPECIALIST SUBCONTRACT PROVISIONAL AMOUNTS
The following subcontract installations were tendered concurrently with the Principal Contract tender, and based on the consultants’ documentation, the lowest tenders for each subcontract trade were as follows (subcontract tender sums are excluding VAT):
Subcontract Trade / Lowest Tenderer / Provisional Sum allowed in Principal TenderWet Services / LMK Plumbing Pty Ltd / R 3400000.00
HVAC / Pristine Air cc / R 4000000.00
Electrical / Trios Electrical cc / R 3600000.00
4. OTHER BUDGETARY ALLOWANCES
The tender documents also made provision for the following Budgetary Allowances (all Budgetary Allowances, exclude VAT):
a. Relocating the existing Liquid Oxygen storage tanks R 65000.00
5. PRIME COST ITEMS
In view of a number of pending interior finishes, the following Prime Cost Amount was also allowed for in the tender documents:
a. 1709 m2 of floor tiles @ R300.00c per m2 R 512700.00
END OF INFORMATION
PAPER 2 – PPE 18 September 2013 Page 1 of 13
Question 1 (15 marks)
The Project QS advises you that the following four Principal Contract tenders were received by means of public tender, as the lowest four tenders, in order from lowest to highest (tender sums exclude VAT) and that certain qualifications, constraints and non-compliances with tender conditions and requirements, must be brought to your attention:
1.1 Iphamela Building Enterprises cc R 38497281.91
Non-compliant tender condition : Did not allow for any afterhours work, which, when the average of the three other tenderers is used, amounts to R721284.36.
1.2 Brudeen Construction cc R 38507 927.07
Non-compliant tender condition : Not registered for VAT and has a BEEE rating of 8
1.3 Mpomelela Builders Pty Ltd R 38975 374.56
BEEE rating of 2, VAT registered and has allowed for afterhours work. All tender conditions were met satisfactorily.
1.4 JGK Contractors R 39059 761.37
BEEE rating of 4, VAT registered and has allowed for afterhours work. All tender conditions were met satisfactorily.
Write a letter to your client, advising them of:
1.1 The four lowest Principal Contract tender results received; and (3 marks)
1.2 The various qualifications, constraints and non-compliant issues, related to each of the four lowest tenders, as advised by the QS; (3 marks)
1.3 In your letter, make a recommendation as to the choice of the Principal Contractor to whom this tender should be awarded; (3 marks)
1.4 Motivate your recommendation, taking into account the various qualifications, constraints and non-compliant tender conditions of each tenderer. In other words, would you recommend the disqualification of one or more of the tenderers and perhaps award in favour of a tenderer that was not the lowest?; (3 marks)
1.5 Although the Tender Documents did make reference to a specific building agreement to be used, recommend which Building Agreement you will advise your client to use, i.e. the JBCC MWA or the PBA, and motivate why; (3 marks)
Answer to 1.1 – 1.5
PREFERED ANSWERS (SIMILAR ANSWERS MAY BE CONSIDERED)
A letter in the Candidate’s own words :
1.1 Stipulating the names and tender amounts of each Tenderer
1.2 Stipulating the non-compliant tender conditions associated with each tenderer, i.e. lowest tender didn’t allow for any afterhours work amounting to R721284.36c, 2nd lowest tender is not registered for VAT and has a BEEE rating higher than that required in the tender conditions.
1.3 The candidate should recommend that this contract be awarded to Mpomelela Builders Pty Ltd in the amount of R 38975 374.56c for reasons as motivated in 1.4 below
1.4 If the required amount for afterhours work, is added to the lowest tender amount, then the lowest tender amount will exceed even the 4th tender by R158804.90 and based there upon, should not be considered. The 2nd lowest tenderer did not meet all the tender conditions and should thus be disqualified. That leaves the 3rd and 4th lowest tenderers, of which the 3rd lowest is compliant with all tender conditions and should be awarded to Mpomelela Builders Pty Ltd, as tendered.
1.5 The client should be advised to use the JBCC PBA, as the scope and complexity of the works are large and high and there will be a need to appoint subcontractors on a N/S basis, which the MWA does not provided for. The PBA also provides for the appointment of consultants and an array of agents, which is limited in the MWA.
Question 2 (20 marks)
2.1 Briefly describe the difference between the following :
2.1.1 An Invited and a Public Tender (4 marks)
2.1.2 A Budgetary Allowance and a Prime Cost Amount (4 marks)
2.1.3 A Construction Guarantee and A Payment Guarantee (4 marks)
2.1.4 A Contract Sum and a Contract Value (4 marks)
Answers to 2.1.1 – 2.1.4
2.1.1 An Invited Tender is limited by invitation only and a Public Tender is open to any company wishing to submit a tender
2.1.2 As per definitions in the PBA
2.1.3 Primarily, a CG is furnished by the Contractor to the Employer and the PG is furnished by the Employer to the Contractor
2.1.4 The CS is the original and net tender and awarded base amount, against which all variation will be offset and the CV is the adjusted Contract Sum after all variations.
2.2 The new Psychiatric Unit will be attached right up against the existing hospital. Underpinning of the existing building will be a requirement. What types of insurances would you recommend your client take out for this procedure and motivate why you recommend that specific type of insurance? (4 marks)
Answer to 2.2
2.2 It is strongly advisable that Support Insurance should be taken out by the Employer, as there is an imminent possibility of the existing structure being affected, by performing excavations, compaction and building operations directly adjoining to the existing structure.
Question 3 (25 Marks)
3.1 Given all the above Contract Information, complete the provided relevant Contract Data document.
NB: Please use the JBCC PRINCIPAL BUILDING AGREEMENT Contract Data EC document attached to the back of the question paper, marked ‘Annexure 3’. Ensure that it is marked clearly and insert the completed forms in the front of your answer book.
Answer to 3.1
See attached Contract Data EC consisting of 5 pages. Award 5 marks for every page correctly filled in.
Question 4 (15 Marks)
On Monday morning 21 October 2013 at 08h00, you are notified by the Principal Contractor, via an email, that he cannot place the order for the reinforcement steel for the ground beam foundations, as required by the program, as has not yet received all the bending schedules from the Structural Engineer. The foundation reinforcement steel must be ordered today, in order to ensure delivery to site by 10 November 2013 in accordance with his program.
You send an urgent request for this info to the structural engineer and on Sunday evening 27 October 2013 at 19h32, you receive the required schedules via email from the structural engineer and forward them straight to the Principal Contractor.
The Principal Contractor eventually places the order for the reinforcement steel on Wednesday 30 October 2013.
The Principal Contractor has opted for Option A under the Adjustment of Preliminaries.
The total Preliminaries amount to R 3215973.57
To date, the Principal Contractor has not yet furnished the breakdown of the Preliminaries into categories, in accordance with 10.3.1 of the Preliminaries.
4.1 Calculate the amount of additional Preliminaries due to the Principal Contractor, if any, due to the delay in furnishing the reinforcement bending schedules.
Answer 4.1
Where the contractor fails to provide a breakdown into categories of the preliminaries1, then preliminaries shall be deemed varied in proportion to the construction period as compared with the initial construction period2 i.e. 75% of the contract sum (JBCC / ASAQS Preliminaries clause 10.3.13)
Thus preliminaries is R 3215973.574
Of this, 75%5 will be varied in proportion to the construction period as compared with the initial construction period6 i.e. 75% of R 3215973.57c = R 2411980.18c7
The initial construction period was 2218 working days. Therefore the amount of preliminaries per day = R 2411980.18c / 221days9 = R 10913.94c per day.10
Although 7 working days and 9 calendar days went by before the PC placed the order11, only 5 working days were as a result of late info12.