AMAZON multi-meters discounts AMAZON oscilloscope discounts
6. TENDERING
6.1 Choosing the Contractor
Contractor selection may be achieved by direct negotiation between client and perhaps only one well known contractor or via the process of open competitive tendering. In order to avoid a large number of bids from, perhaps, unsuitable tenderers, the client may restrict the number of prospective tenderers by an initial pre-qualification and use of a short list of suitable contractors. The advantages and disadvantages of these methods are described in TABLE 3.
Note that the tendering process for large public works within the European Union (EU) is covered by legislation.
6.2 Estimating
The elements of the estimate for the works includes:
_ Cost.
_ Contingency.
_ Overheads and profits including a risk margin.
_ Effect of the type of conditions of contract employed.
The tenderer will cover risk by modifying the overall bid price and placing qualifications and clarifications in the offer in order to try and improve the definition. A bidding check list is included in Appendix B of this section to assist in the process of appreciating some of the major factors involved. Contingency covers the probability of cost over/under-runs for specified items of cost estimate that may be estimated in money terms. Normally, a proportion of total contingency is included in the final tender sum and not the total amount. Risk margin covers uncertainties which do not relate to specific items in the cost estimate but which are of a wider nature. This is often difficult to estimate in money terms and requires a considerable degree of expertise (Fig. 15).
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TABLE 3 Methods of Tendering Type of Tender Process Advantages Disadvantages Open competitive tendering
1. Allows many and perhaps new contractors to bid for the work.
2. Allows tender list to be without bias.
3. Ensures good competition.
4. Prevents contractors from fixing prices between themselves.
1. Long tender lists -- wasteful of client and contractor time and monies. May discourage otherwise good contractors because of the remote chance of obtaining the contract.
2. Tender adjudication open to scrutiny and question if lowest bidder is not granted the contract.
Selective tendering
1. Only competent contractors invited to tender for the works.
2. Cost of tender adjudication reduced.
3. Competing contractors may have freedom to allow adequate profit level and therefore flexibility and stability.
1. Must avoid favoritism when drawing up list of tenderers.
2. Must continually review tender list in order to allow new contractors to compete.
3. Possible higher tender prices in comparison with open tendering.
4. Possible price fixing between small band of contractors.
5. May conflict with requirements of legislation or of funding authority.
Negotiated tenders
1. Contractor may give advice to client during tender negotiations.
2. Work can commence at an early stage (materials may be ordered on a cost plus basis before overall contract arrangements have been agreed).
3. May be only way to encourage a realistic bid from a specialist contractor.
1. Cost of the work may be higher than if completed on a competitive tender basis.
2. Only really applicable to specialist contractors with good reputation.
3. May conflict with requirements of legislation or of funding authority.
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FIG. 15 Estimates during the project life cycle.
Concept Operation 3 months to 3 years 3 to 6 months 1 year (approx.) Evaluation/ Planning Detailed engineering Construction Management level decisions Set minimum costs Definition Preliminary rough estimates Semi-detailed estimates Detailed estimates Final reconciliation Basic engineering 1 to 2 years Contractor selection
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It is important for both client and contractor to have a clearly defined estimating policy. Without such policy, it is possible to overestimate the cost of the works by double counting contingency allowances. Underestimating by not fully understanding the implications of the terms and conditions of contract is also an area of error.
The types of estimate required will vary from the rough estimate at the very early concept stages of the project to definitive estimates prior to the detailed engineering/construction phases.
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TABLE 4 Possible Relative Weightings for Cost Criteria
Technical Management Financial Manufacturing Quality Control 40 Design approach 20 Plan 30 Price 20 Experience 20 Quality plan 25 Technical capability 26 Organization 15 Strength 15 Plan 25 Operational system 14 Manpower 15 Accounting system 13 Facilities 15 Development plan 20 Controls 6 Skills 25 Technical capability 5 Experience 10 Capability 10 Tooling 8 Reliability 10 Reliability 20 Cost control 16 Controls 15 Reliability 7 Specification conformity 5 Labor relations 10 Estimating 12 Improvements plan 15 Record system 5 Release of software 5 Training 100 Total 100 Total 100 Total 100 Total 100 Total
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6.3 Tender Evaluation
Different countries and organizations have different methods of evaluating tenders. Usually very strict guidelines are enforced in order to avoid any favoritism for one contractor or another. It is not necessary to always accept the lowest bid price, since the bid may not be technically compliant and may not have met the commercial conditions required. Therefore it must be made clear at the tender stage what tender evaluation method is to be employed, so that there can be no complaints. Consider the following examples all of which are valid approaches:
1. The bid closest to the average of all bids might be accepted on the basis that the average bid price from a large range of tenderers might be considered the most correct estimate of the cost including a competitive profit.
2. The lowest bid is accepted provided that it is not less than, say, 80% of the client's original estimate for the work on the basis that this will give the most competitive, but still realistic, bid from a competent contractor.
3. The lowest bid provided is not less than, say, 90% of the average of all bids, on the basis that a very low bid from a tenderer might indicate that he does not have a full appreciation of the work involved.
For a typical transmission and distribution contract, considerable emphasis will be placed upon technical compliance as well as cost. Therefore the technical merits of the different tenders have to be evaluated by a fair method of comparison. One such method is to apply a 'points system' score for each major part of the tender under such sections as:
_ Technical.
_ Management.
_ Financial.
_ Manufacturing.
_ Quality control.
Each section is then broken down into criteria which are considered significant and a relative weighting as to the importance of each of these factors allocated. Such an approach might be as shown in TABLE 4.
The advantage of this approach is that it applies exactly the same criteria to each bid and allows examination of the fair approach adopted.
The disadvantage is that critical factors may get overlooked. For example, if the tenderer does not have the correct design approach then the overall project may fail to function correctly. A high point score has been given to reflect this in the above example. However, in some cases such as for the development of a SCADA (supervisory control and data acquisition) system for distribution substations the correct design approach may out weigh all other factors and must be correct. For this reason substation and overhead line tenders are more normally evaluated on technical grounds item by item for compliance with the specifications. Engineering judgment is used to compare differences and their relevance without the 'straight jacket' of a points system.
7 MODEL FORMS OF CONTRACT-- EXERCISE
The questions given in this section are designed to allow readers to familiarize themselves with standard Model Forms of Contract associated with design, supply and installation transmission and distribution project work.
The questions are applicable to IMechE/IEE, MF/1, ICE and FIDIC Model Forms, copies of which will be needed to answer the questions. The relevant clauses should be quoted in the answers together with a summary and interpretation of these clauses.
1. The engineer (E) under a contract has appointed in writing an engineer's representative (R) with special powers. E is killed in an accident. R is aware of this but continues to issue instructions to the contractor.
Should the contractor follow these instructions if he is aware of E's death? How should the situation be regularized?
2. A contractor issues a sub-contract for the supply of reinforcing rods for a substation concrete structure which houses plant which he is responsible for manufacturing and installing. Due to strike action in the sub-con tractor's works, the main contractor is delayed for 28 days. He claims from the purchaser for a 28-day extension of time and associated costs.
Advise the engineer on what action he should take.
3. A contractor who is in cash flow difficulties decides that he can ease his cash flow situation by delivering to site materials and plant well ahead of program. His intention is to claim for the value of these materials in an interim payment certificate.
Will this scheme work? What are the rights of the parties? What would be the situation if a receiving order (bankruptcy suit) were made against the contractor?
4. What rights has a purchaser against a contractor who persistently refuses to follow the engineer's reasonable orders?
5. What is the difference between a progress and an interim payment certificate?
6. How may a purchaser recover liquidated damages?
7. A contractor who is in financial difficulties asks the engineer to take over parts of the works as and when they are completed.
Can the engineer do this? Can the contractor enforce it? What would be the situation if the engineer issues a qualified taking over certificate? Has the engineer the powers under the contract to do this?
8. A contract has been completed and after the issue of the final certificate, the engineer discovers that the wrong grade of stainless steel has been used as specified in the contract technical specifications for the plant.
What, if any, are the rights of the purchaser?
9. In what way do the rights of the contractor after suspension of the works by the engineer differ from those when delivery has been suspended?
10. After the works have been taken over, under what circumstances can the contractor have access to the works?
11. Under what circumstances can a purchaser refuse or restrict the payment of sums due to inflation of costs?
12. Under what circumstances can the engineer order overtime or other acceleration measures without extra cost to the purchaser?
13. In a d250,000 contract for the supply and erection of substation plant, the works are divided into three sections as follows:
Section A _ Value d100,000 Completion date _ 31.3.2012 Section B _ Value d100,000 Completion date _ 14.4.2012 Section C _ Value d 50,000 Completion date _ 14.4.2012 Due to the design of the works neither Section A or Section B can be used until Section C is completed.
Variations are ordered by the engineer with associated extensions of time as follows:
Section A _ Value d2,000 Extension of time granted _ 2 weeks Section B _ Value d5,000 Extension of time granted _ 4 weeks Section C _ Value d500 Extension of time granted _ nil weeks The actual completion dates are as follows:
Section A _ 14.4.2012 Section B _ 26.5.2012 Section C _ 2.6.2012 The percentages associated with liquidated damages included in the appendix to the conditions of contract are 1% of the contract value up to a maximum of 6%. As the client's advisor, prepare a short paper to advise him what liquidated damages (if any) are due arising from the late completion of the works.
APPENDIX A: PROJECT DEFINITION/QUESTIONNAIRE
(for use by design consultants)
Schedule A _ Client/Consultant Data
A1 Project and client A2 Services by consultant A3 Regulations and specifications A4 Estimating data A5 Documentation A6 Progress, inspection and shipping A7 Site data and conditions A8 Site construction and data A9 Extent of work by consultant A10 Preferred suppliers and equipment
Schedule B _ Local Information
B1 Drawings, maps, and clearances B2 Details of existing network
Schedule C _ Project Information
C1 Substations C2 Feeders C3 Switchgear C4 Transformers C5 Busbars C6 Isolators and Earthing Switches C7 Protection C8 Control and communications C9 Overhead lines C10 Underground cables C11 Civil works
Schedule A _ Client/Consultant Data Schedule A1 _ Project and client Title of Project Consultant's Job Number Location of Project Works General Description of Project Works Client Address Name of Principal Contact(s) and Title Telephone No.
Fax No.
Email address Governing Body of Area Address, Name of Principal Contact(s) and Title Telephone No. Fax No. Email address Local Agent Address, Name of Principal Contact(s) and Title Telephone No. Fax No. Email address
Schedule A2 _ Services by consultant Site Selection Site Survey and Soil Mechanics Development Studies Economic and Financial Evaluation Engineering Design (see note below) Ordering Expediting Inspection at Works Shipping and Insurance Custom Duties and Clearance Through Port Supervision of Construction and Erection Supervision or Carrying Out Testing Supervision or Carrying Out Commissioning State Extent of Services for Initial Operation of Plant, if any Selection of Operating Staff (Minimum Qualifications, etc.) Other Services: General At Site
Note: There are two main consultant engineering roles.
1. The traditional British method in which the consultant produces the general design and specifications. The consultant controls the tender process and produces a tender evaluation report with recommendations. The appropriate vendor then produces the detailed design and materials lists.
By this method major items of plant would be controlled by the contractor and ordered complete.
2. The American method in which the consultant produces the detailed and complete design and materials lists. By this method all items of plant are generally subject to separate purchase orders.
The difference in the amount of work for the consultant entailed in these two methods is considerable. It is therefore essential at the outset that the method to be adopted is clearly understood by both client and consultant.
See also the note to Schedule A3.
Schedule A3 _ Regulations and specifications Building Regulations or Acts Electricity Regulations or Acts Health and Safety Regulations or Acts, including medical requirements (vaccinations, etc.)
* Fire Regulations or Acts Labor Laws Import/Export Regulations Company Law Insurance Regulations Currency Regulations Other
Is there any preference for any standards that the works or plant is required to be built in compliance with, and what precedence is given:
British Standard Specifications (BS) International Electrotechnical Commission (IEC) Other (ANSI, DIN, VDE, etc.)
* Note: In the United Kingdom, the Construction (Design and Management) Regulations require the clear allocation of the duties of client, client's agent, planning supervisor, principle contractor, and designer. It is the responsibility of the client to designate their planning supervisor, client's agent (if any), and principle contractor, although in practice a consultant or major contractor may provide advice to the client on such appointments.
Schedule A4 _ Estimating data State which of the following costs are applicable and who is to meet them.
Are any of the above to be included in the consultant's financial capital estimates for the project? Are there any local price controls Are import licenses required? Are export licenses required? Remarks:
Schedule A5 _ Documentation
State client's and consultant's requirements for documents giving number of copies required and routing.
Schedule A6 _ Progress, inspection and shipping
The following information should be submitted on separate sheets where consultant's services are employed for progress, inspection and shipping.
Note that where the consultant is also employed for design and ordering items 3, 4, 7 and 8 below will be required at an early stage for release of plant specifications and orders.
1. A copy of all orders giving full details and delivery requirements, etc.
2. Information regarding inspection as to what standards are applicable (IEC, etc.)
3. Details regarding shipping _ shipping marks, marking of cases, packaging against special items such as corrosion, humidity, rain, high temperature, rough handling, etc.
4. Applicable shipping payment methodology _ FOB, FAS, CIF, etc.
5. Import and export licenses, etc.
6. Insurance.
7. Port of disembarkation and maximum port lifting capacity, capability to handle containers, etc.
8. Maximum weight and sizes for cases for road and rail transport to site.
Schedule A7 _ Site data and conditions
1. LOCATION State the location of the sites, if location plans are attached and if site layout plans are attached. If ordnance or geological maps are required state where available and attach if possible.
Is site suitable for future expansion?
2. SITE LEVELS Datum level at site(s).
Datum reference.
Nearest bench mark (if any).
3. WEATHER CONDITIONS
Average rainfall per annum Maximum rainfall per annum Minimum rainfall per annum Severity of rainstorms Air temperature (max.) Air temperature (min.) Prevailing wind direction Average wind velocity Maximum wind velocity Barometric pressure (max.) Barometric pressure (min.) Relative humidity (max.) Relative humidity (min.) Is condensation severe due to rapid temperature change with high humidity? Maximum snowfall Frequency of lightning Sand and dust storms Earthquakes Frost penetration Soil temperature at cable laying depth (max.) Soil temperature at cable laying depth (min.) Soil thermal resistivity Ground resistivity (if known for different substation sites)
4. GEOLOGICAL DATA
State if any geological surveys are available and if possible give nature of ground strata.
State data regarding test holes made in recent times, if available.
Give soil bearing pressure and characteristics, if known and if piling is likely.
Details of any foundation troubles experienced with existing buildings.
Detail any troubles with surplus surface water drainage.
Minimum depth of water table to be encountered.
5. SOIL CORROSION
What is the experience regarding corrosion of buried pipework and cables? State if any known satisfactory practices.
6. SEWAGE AND DRAINAGE
What are the proposed arrangements for handling sewage and/or drainage?
7. LOCAL AUTHORITY WATER SUPPLY
What is the availability of water drawn from the local water authority?
8. ACCESS TO SITE
Describe the access to site(s):
a) Personnel
b) Light goods
c) Heavy goods (transformers, etc.) Nearest airport Distance from site(s) Nearest seaport Distance from site(s) Nearest railway station for: Passengers Distance from site(s) Goods Distance from site(s)
9. HANDLING FACILITIES
Largest goods that can be handled by:
Airport Docks Rail Road
10. REMARKS
Schedule A8 -- Site construction and data
1. GENERAL CONSTRUCTION SERVICES
Describe generally the arrangements and the extent of consultant's responsibilities for the following:
Supply point for temporary electrical power (state voltage, frequency, and phases plus kW or kVA capacity and tariff) Site distribution of temporary supply (if any) Temporary compressed air supplies including pressure Water supplies _ general, drinking, etc.
Water, gas, electricity, etc. for site personnel accommodation Site telephones Material testing
2. ACCOMMODATION
Working accommodation for consultant's staff Working accommodation for contractor's staff Living accommodation for consultant's staff Living accommodation for contractor's staff Medical facilities Transport for labor to site (distances involved) Roads linking site(s) with existing roads Rail tracks linking site(s) with existing system Storage facilities for plant on site Unloading of plant on site
3. LABOR
Engagement of labor _ local laws applicable, working week, over time limitations, etc.
4. EQUIPMENT
Instruments for testing and commissioning
5. GENERAL
Will the consultant's resident engineer have authority to sanction local orders without reference to the client? If so to what value?
Schedule A9 -- Extent of work by consultant
Are the following craftsmen and machines locally available? Jointers Wiremen Electrical fitters Overhead line erectors Rough laborers Form of contract required? Notes:
1) FORM OF CONSTRUCTION CLASSIFICATION
a) Brick 1) Totally enclosed
b) Steel frame and brick 2) Partially enclosed
c) Steel frames with asbestos covering 3) Roof only
d) Steel frames with sheet metal covering 4) Outdoor
e) Wooden 5) Consultant to recommend
f) Reinforced concrete
g) Concrete blocks
h) Other forms of construction
i) Consultant to recommend
2) CONSTRUCTION
Is the consultant to arrange for specialist erectors where necessary? State arrangements.
Are the following craftsmen and machines available locally? Excavators Names of recommended local contractors and associated rates for craftsmen listed. Pile drivers Reinforcement benders and fixers Carpenters and joiners Concreters Drain layers If craftsmen are not available what have been arrangements used in the past? Brick layers Asphalters; Pairers and tilers Roofers Plumbers and hot water fitters Are Quantity Surveyors to be employed to prepare a Bill of Quantities and should their fees be incorporated in with those of the consultant? Welders Glaziers Painters Rough labourers
3) FORM OF CONTRACT DESIRED
RIBA (not generally recommended for substation, or overhead line and cable works) ICE FIDIC IMech or ElecE Model Forms MF/1 NEC/ECC Other Partnering/Alliancing
Schedule A10 -- Preferred Suppliers and Equipment Insert names of suppliers, country of supply, and/or local contractors (if any) preferred by the client.
1 CIVIL WORKS 2 ELECTRICAL (SUBSTATIONS) 3 ELECTRICAL (OVERHEAD LINES) 4 ELECTRICAL (CABLES) 5 CONTROL & COMMUNICATIONS
Schedule B --Local Information
Schedule B1 -- Drawings, maps, and clearances
The following information should be supplied where required so that new plant may be designed to tie-in and operate satisfactorily with the existing equipment and be arranged and installed to conform generally with the existing installations and client requirements.
Single line diagrams Ordnance maps of existing and proposed Overhead line and underground cable routes (Scales typically 1:200,000, 1:50,000, and 1:10,000) Site layout drawings of existing substations and feeders Power and control layout drawings Layout and/or schematic of earthing system Description of types of feeders and construction Firm capacity of all substations and feeders Maximum demands at all substations with duration of peak loads General description of substations and existing equipment Clearance requirements for all situations Details of protection, control and telemetry equipment Details and make of any compulsory equipment required for purposes of standardization by the client with the existing system Fault levels at all existing switchboards Details of any existing spare circuits Note: Where possible items should be marked on the drawings to show details of the proposed new works.
Schedule B2 -- Details of Existing Network
Design data from which existing equipment was supplied:
Switchgear Transformers Reactors Batteries Earthing equipment Control and telemetry equipment Underground cables Overhead lines Network details Voltages Phases Frequency Rate of rise of recovery voltage Insulation levels
Schedule C -- Project Information
Schedule C1 -- Substations
1. Name of substation
2. Location of site
3. Drawing no. showing site layout
4. Drawing no. showing line diagrams
5. Existing, new or extensions to existing substation
6. Indoor or outdoor
7. Service conditions
APPENDIX B: BIDDING CHECKLIST
This checklist is intended to assist clients and contractors when preparing or adjudicating tenders for transmission and distribution construction work. The preparation of tenders for large projects is a costly business. Working through the checklist will help to ensure that no major items have been overlooked.
A Initial contractor pre-selection B The client/the contractor C Competition D Technical specifications E Quality assurance F Delivery G Payments H Estimates I Documentation J Terms and conditions of contract A INITIAL CONTRACTOR PRE-SELECTION
A.1 Is this a serious bid from which a contract will follow or is the client looking for a measure of cost to gauge work in the distant future? A.2 Is there a pre-qualification in order to gauge the capacity or capability of the contractor? A.3 Are there at this stage any special terms and conditions of contract that would make the final contract too risky to consider further? For example consequential loss, extremely high liquidated damages, high performance bonds, ongoing defect rectification, etc., contract clauses.
B THE CLIENT/ THE CONTRACTOR
B.1 Is the client or contractor well known with the resources and past track record to consider further? B.2 If this is an overseas job what experience does the client or contractor have for working in the country under consideration? B.3 If supported by an international bank are client or contractor able to conform to the usually strict guidelines required? B.4 Are special insurances required?
C COMPETITION
C.1 What other large contracts are currently on offer from this or alter native clients? C.2 Does the contractor have other competitors and if so who are they? What are their strengths and weaknesses? C.3 Are there any particular non-financial features that the client is looking for or which the contractor is able to offer which could differentiate the bid? (history of previous satisfactory work, training, spares availability, maintenance capability, etc.) C.4 What technical, financial or marketing advantage would help to differentiate one contractor from another? C.5 How many tenderers are being invited to bid? If more than four or five contractors are invited to bid for substation or transmission line work will this discourage high quality contractors from tendering?
D TECHNICAL SPECIFICATIONS
D.1 Has the contractor carried out this type of work before with a successful track record? D.2 Have the standards to be adopted clearly specified and if so may they be altered? D.3 Must the tender exactly conform to the specification or may fully compliant bids plus alternative bids be offered? D.4 Are there any restrictions with regard to subletting any or all of the works by the contractor? E QUALITY ASSURANCE
E.1 Are special QA conditions applicable? E.2 Are special test procedures applicable?
F DELIVERY
F.1 If nominated suppliers are specified what is the client or contractor experience with this supplier in the past as regard to reliable and prompt delivery of equipment?
F.2 Are deliveries likely to be a critical factor in the project program and if so is a critical path network program analysis necessary?
F.3 Are delivery dates for manufactured goods (switchgear or transformers, etc.) negotiable?
F.4 Are penalties to be applied for late delivery of manufacturers goods, which may be outside the control of the main contractor, to be applied by the client?
F.5 What are the transportation arrangements? Is existing infrastructure adequate for transportation of materials to site?
F.6 If the site is unavailable on time or if materials require special ware housing is this covered under the contract?
F.7 Are procedures for monitoring the progress of the contract clearly defined?
G PAYMENTS
G.1 What contract bond arrangements are required? Who is best to carry these costs (client or contractor)?
G.2 Are progress payments involved and are the milestone events against which payment is to be released clearly defined?
G.3 Is the payment documentation clearly defined and kept simple in order to avoid client/contractor disputes?
G.4 Is foreign exchange required to fund the project? Are there any advantages in requesting payments to be made in multiple currencies? Are currency restrictions involved in the country where the construction work is to take place or where specific manufactured goods are to be purchased? G.5 What insurances are required? Who is best to carry these costs (client or contractor)?
G.6 Are liquidated damages involved? Is this a contract where time is of the essence?
G.7 Does the contract allow for contract price adjustment formulae to cover, for example, changing prices for raw materials such as copper?
G.8 What is the inflation situation in countries of origin of particular manufactured goods required or in the country where construction is to take place?
H ESTIMATES
H.1 What is the cost of preparing this tender?
H.2 Does the work involve any special cost estimating procedures?
H.3 Have risk and contingency allowances been made in the cost estimates?
H.4 Is the technology well known or new and untried?
H.5 Are there any restrictive labor practices or labor laws? Are labor relations good in the area of construction?
I DOCUMENTATION
I.1 Are the requirements for documentation in terms of quality, quantity, and types throughout the project life cycle clearly defined in the contract?
I.2 Are special storage conditions required for project life time records defined? What is the period for which such records must be maintained?
I.3 Are any special requirements covering vendor documentation, operation and maintenance manuals, as-built drawings, etc. defined?
J TERMS AND CONDITIONS OF CONTRACT
J.1 Has the legal department checked the contract document for key clauses?
J.2 What is the ruling law that governs the contract? Is it known and acceptable?
J.3 Does the contract allow for variations to the scope of the works? If so what is the maximum variation to the contract value allowable before rates may be varied?
J.4 Does the contract allow adequate cover for the related impact to time and cost associated with variations to the original scope of work? Are sufficient safeguards in place for the control and management of variations?
J.5 Does the contract recognize situations outside the control of client or contractor (force majeure)?
J.6 Have restrictions been placed regarding publicity or secrecy?
J.7 Is it clear who is responsible within the client, contractor, and consultant organizations for the contract? What powers and authority do they have?