Evaluation of Contract Administration for Public Projects in Saudi Arabia By Khaled A. Al-Gunaiyan Nov 1992

Outline Objective Research Methodology Survey Results Conclusion Recommendations

Objective Study and evaluate the Saudi Government Procurement Laws and Regulation (GPLR) articles on construction contracts. Introduce measures that assist in effectively managing construction contracts of public projects.

Research Methodology Literature review, Background & History Questioner Developing & Survey Data Collection & Analysis Findings Conclusion and Recommendation

GPLR Done by Ministry of Finance and National Economy Published in basic laws & 40 regulations The main purpose is to govern the procurement process and forms the framework of construction contract conditions and administration.

Deficiencies NO major revision since 1977 NO Systematical procedure for updating NO enforcement of articles NO substantial evaluation

Survey Methodology Question Design Tendering Phase Construction Phase Contract Administration Sent to 100 government agencies that have the authority to do contracts.

Results & Analysis Bid Bond Contract Award Retainage

Bid Bond A guarantee that the contractor will enter into a contract if it is awarded to him. Common PracticeGPLR Normally 5-10%1%

Bid bond Survey Result Proposed Practice Frequency% 10% Common 00 5%1620 1% of bid price Current 5974

Contract Award Started at bid opening and ended at contract signing. Saudi Aramco PracticeGPLR Award to the lowest overall cost bidder with technical acceptance. Same.

Contract Award Survey Result Proposed PracticeFreq.% a) The Lowest Responsive bidder Common 1824 b) The first bid lower than the average57 c) Awarded to the first bid lower than the estimate 4560 d) The second lowest00

Retainage Is an amount of money held from payment to the contractor according to terms of the agreement. Common Practice GPLR 10% of any progress payments to Contractor. The GPLR allows for the following: 1) Payment of the last certificate will be deferred until acceptance. Not less than 10% (Current practice) 2) As common practice + hold last payment

Retainage Survey Results Proposed PracticeFreq.% a) Hold 10% of each progress payment Common 1216 b) Same as (a) + hold last payment11 c) Hold 10% till the project 50% completed. If satisfactory release 5% of all retainage and hold 5% till project completion d) Same as (c) but if satisfactory release all retainage & hold the last payment. 912 e) Hold 5% of each payment till end.45 f) (e) + hold the last payment23 g) No retainage at all11 H) Current GPLR practice3748

Conclusion A strong support to still use the current practice 1% of bid price as a bid bond Using a project estimate as a base for contract award was highly recommended The current practice of retaining the last payment of the contractor but not less than 10% of the contract value received was supported

Recommendations GPLR articles should be visited, organized and updated periodically. Government authorities are urged to initiate a contract administration program where consultants and contractors are invited to participate.

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