CONTRACTING & BILLING

AGREEMENTS WITH CONTRACTORS

Agreement is a legal document, which acts as a legal binding between both the parties for all terms & conditions mentioned in the document.

Agreements are based on:

• Legal Conditions
• Responsibilities of Contractor
• Responsibilities of Company
• Scope of Work
• Payment terms & mode of measurements

After finalizing the rates & conditions, agreement is to made .Both the parties should act on it as legal & mutual understanding. Work is to be commenced only after issuing/receipt of Agreement copy & Work Order. An agreement is beneficial for both the parties as

• It binds both the parties legally for any disputes, non-compliances of the terms, arbitration
• Rates are finalized & confirmed for various items, before commencement of
• Scope of work is very clear before commencement of work
• Mode of measurement is finalized before commencement of
• It clears the understanding between both the parties .
• Finance provision as per the payment terms can be made by both the
• Estimation for total expense overheads etc. can be planned out by both the

TYPES OF CONTRACT AGREEMENT

1.    ITEM RATE CONTRACT

1. BUILT UP AREA BASIS CONTRACT
2. LUMP SUM CONTRACT
3. ITEM RATE CONTRACT

For billing & measurements, the work is split into various items.

Rates are finalized for various items as per agreements and are considered for billing. Measurements are taken as per approved mode of measurement for billing.

2)    BUILT UP AREA CONTRACT

For this type of contract the rates are worked out for estimated material, labour, tools & plants, machinery cost, overhead expenses etc.

Value of contract is derived in terms of built up area agreed mutually.

Mode of payment is finalized as per the stage wise work done, or as per the percentage agreed, or as per contract.

3)    LUMP SUM CONTRACT

For lump sum contract, measurements are not required for billing as normally petty works are to be carried out through this contract.

TYPES OF BILLS

Contractors are paid by preparing bills for the work done at various stages through

A)   ADVANCE BILLS

1. RUNNING ACCOUNT BILL
2. FINAL BILL 

1. ADVANCE BILL

• If mentioned in contract, an advance Bill may be prepared, after receipt of material supplied by the contractor.
• To facilitate the contractor or to give an interim relief due to some uncertainties, an advance bill may be prepared considering the expected work to be completed within a scheduled
• If some discrepancies are observed or some disputes arise then to avoid further delay some part of the payment can be released as an advance payment .

B)    RUNNING ACCOUNT BILLS (R.A.BILLS)

If mentioned in the contract, contractors are paid on forthrightly or monthly basis for work done during that period.

For such bills, quantities or work done during that period is to be measured & paid.

Preparing R.A. Bills at Site

Billing is one of the most important documentary activity and should be sincerely carried out by engineers, very sincerely & carefully. All measurements should be recorded on measurement sheets with required self- explanatory sketches & notes. Payment is to be made as per stage of work & percentage payable to that stage of work. Previous work done & advances paid up to date are to be considered while calculating final payable figure. Rates & mode of measurements should be as per the agreement .In case of doubts refer higher authorities. Check that all necessary information is written & bills are duly signed.

Record to be maintained at site

• Copies of all agreements with contractor / work
• Copies of bills shall be maintained in separates files at site
• The contractors file and payment status shall be updated
• Quantities of work done as per drawing & as actual as per site execution, shall be

Specimen format of R.A. Bill

R.A. BILL FORMAT

Name of Company:                                                                                                                 R.A. Bill No:                                                                                                                                   Name of Site:                                                                                                   Name of Contractor:                                                                                                                                                            Date:                                                                                       Period:

Work:                                                                                      Building:

3) FINAL BILL

After satisfactory completion of the work by contractor; the final bill may be prepared. As per the agreement the liquidated damages period shall be considered while releasing the retention amount. The recommended consumptions of materials shall be crosschecked at the time of final bill. The various amount debitable against penalties, material supplied by company, water & electricity charges, if any, shall be taken into account.