Highway Construction
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Billing
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What is Highway Construction Bill?
Construction Bills are the request made by the contractor or concessionaire to the client for claim
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his expenses of all work done at construction site. In writing with all supporting documents as per
agreed contract condition between client and contractor or concessionaire.
Prepare document is called construction bill.
Process of preparation and certification is called construction billing.
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Who prepared the construction bill known as Billing Engineer.
We study about it in Billing Engineering.
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Clients in Highway Projects?
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Central Government State Government
MORTH (Ministry of Road & Transport Highway) PWD (Public Work Department)
NHAI (National Highway Authority of India) Road Department
NHIDCL (National Highway Infrastructure MPRDC
Development Corporation Limited)
HRDC
Ministry of defense reinforceqst.com
BRO (Border Road Organization)
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Modes of Implementation of
Highway Projects
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Public Funded Projects (PFP) Public Private Partnership (PPP)
Item Rate Contract Build Operate Transfer (BOT) Toll
Engineering Procurement and Construction (EPC) Build Operate Transfer (BOT) Annuity
Hybrid Annuity Model (HAM)
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Modes of Tender
There are different modes of awarding tender of highway projects.
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Item Rate
EPC (Engineering Procurement and Construction)
BOT (Built Operate Transfer)
HAM (Hybrid Annuity Model)
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Note : Which type of bill will be prepared is depend on agreed contract between client and contractor
or concessionaire, and contract is depend on mode of tender publish by client.
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Important Terms of Agreed Contract
Letter of Intent (LOI) Substitute Item
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Security Deposit Non - Tender Item (Extra Item)
Mobilization Advance Price Escalation
Construction All Risk Policy (CAR) Liquidity Damage
Letter of Award (LOA) or Work Order Virtual Completion Certificate (VCC)
Material Advance Defect Liability Period
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T & P Advance (Machinery) Retention Money
Variation Deviation Item Successful Completion Certificate (SCC)
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Letter of Intent (LOI)
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In the case of upper level of work industry expert clients, firstly give LOI to contractor after the
tendering process, rate negotiation, rate fixing, and fixing of all technical aspects that means
client want to give the work to the contractor, client mention the mobilization period in LOI,
through this LOI client want to convey the contractor within 30 days, you have to mobilized the
construction site, means arrangement of site office, batching plant, transit mixture, pump, stores
and quality lab. reinforceqst.com
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Security Deposit
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Contractor execute the work at construction site with all the specification and quality
perimeter that is given in work order, the contractor have to deposit the security amount
to the client at least 5% or as per client’s terms & condition.
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Key Activities and Resources for
Mobilization
Temporary Approach Road Steel Yard & Cutting Bending Machine
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Temporary Site Barricading Testing Lab & Equipment
Project Site Office Concrete Batching Plant, Transit Mixture &
Concrete Pump
Labor Hutment for living of labors
Safety Arrangement
DG Power / Cable Site Lightning Arrangement
Survey Equipment
Water Treatment Plant & Water Tank with Pumping
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Arrangement Transportation vehicles for carrying staff
Cement Store Staff Accomodation
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Mobilization Advance
Mobilization refers to the activities, resources and arrangement carried out by contractor before
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starting the work at construction site.
Mobilization Advance is the recoverable advance payment maximum 10% of contract value made
to the contractor at the time of award of work for the financial stability and maintenance of cash
flow and it can paid in the 1 or 2 installments against submission of equivalent amount of security
as non revocable bank guarantee, letter of credit, corporate guarantee.
Mobilization advance recovered from his construction bills with interest with reference to the
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contract condition on pro rata basis.
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Construction All Risk Policy
(CAR)
CAR policy is comprehensive coverage insurance against damage or lose in respect of all kind of
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civil engineering project.
Road
Flyover
Airport
Building
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Water Tank
Sewage Treatment Plant
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Basic Covers in CAR Policy
Earthquake
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Storm or Cyclone
Land Slide
Flood
Collapse
Fire and Explosion
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Loss or Damage due to strike, riot and civil commotion (SRCC)
Pilferage, Burglary and Theft
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Construction All Risk Policy
(CAR)
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A construction site is prone to all shorts of accidents, loses, pilferage, theft, damage,
legal claims, escalation due to inflation in material as well as damage of third party,
liability such as property, fatal injury or death.
Contractors all risk insurance policy that cover the risk during construction
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comprehensibly it includes physical lose or damages to property plant & machinery and
tools, work brought on the site and temporarily work erected on site.
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Construction All Risk Policy
(CAR)
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Coverage can be extended to “include the interest of client, contractor, sub contractor,
supplier and manufacturers”.
“All risk” insurance covers accidental & physical lose or damages to contract work
during the execution of construction project.
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Coverage begins from the commencement of work & terminates on handing over the
work to the client or an expiry of policy whichever is earlier.
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Letter of Award (LOA)
When the contractor mobilized all the things that are require to start a project within mobilization
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period on construction site then LOA is given by client to the contractor, it is legalized contract
agreement on judicial paper between client & contractor, that contains BOQ, work order, GCC,
SCC & technical specification to the contractor.
Within mobilization period, if contractor does not mobilized the construction site, client can give
the notice to the contractor to leave the construction site and client submit the bank guarantee to
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respected bank to return back amount of mobilization advance & client have a right to give the
project to second lowest quoted bidder.
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Material Advance
When contractor on board on construction site and want to start the work firstly he purchases the
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construction material and carry on site then he claim the bill only for materials before starting the
construction work.
Firstly client verify the purchased material on construction site then passes the maximum 75% of
procurement bill.
It’s not free, when contractor will submit the bill, then client will start recovery of material advance
from contractor bill.
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Note : It is not compulsory, it’s a choice of client. Contractor should have discuss about the
material advance and it’s terms & conditions before signing the contract agreement.
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T & P Advance (Machinery)
When contractor on board on construction site and want to start the work firstly he purchases the
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construction machinery that are required and carry on site then he claim the bill only for
machineries before starting the construction work.
Firstly client verify the purchased machines on construction site then passes the maximum 75% of
procurement bill.
It’s not free, when contractor will submit the bill, then client will start recovery of T & P advance
from contractor bill.
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Note : It is not compulsory, it’s a choice of client. Contractor should have discuss about the T & P
advance and it’s terms & conditions before signing the contract agreement.
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Variation Deviation Item
When the quantity of executed work or item exceed on construction site from work order (BOQ)
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quantity it is known as variation deviation item.
Before starting the work of deviation quantity we have to take permission from client.
We will claim variation deviation item in construction bill separately.
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Substitute Item
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When we replace one item or work by another item is known as substitute item.
Before starting the work of substitute item we have to take permission from client.
We will claim substitute item in construction bill separately.
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Non – Tender Item
We are executing some work at site that is not mention in work order it is known as Non – Tender
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tem or Extra Item.
Before starting the work of non – tender item we have to take permission from client.
We will claim non - tender item in construction bill separately.
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Price Escalation
An Escalation clauses is a provision in a contract that cause for adjustment in a fees, wages or
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other payment to account for fluctuation in the cost of raw material or labors. This clauses shift
the burden of increasing material and labor cost from contractor to client.
In NHAI projects price escalation is applicable on increase, decrease in whole sale price index of –
Labor Wages
Cement
Steel
Plant & Machinery reinforceqst.com
Bitumen
Fuel & Lubricant
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Liquidity Damage
When contractor do not complete the work within a completion period, penalty or fine is taken by
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client i.e., 0.05 to max. 5% of cost of project, the percentage of fine is mention in the clauses of
liquidity damage.
In this case EOT (Time extension letter) is given by client to the contractor if within EOT,
contractor do not complete the project, client have a right to terminate the contract.
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Virtual Completion Certificate (VCC)
When contractor complete the project then submit the final bill to the client at the time of
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submission of final bill client issue the virtual completion certificate to the contractor.
Defect Liability period start from the issue date of Virtual Completion Certificate.
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Defect Liability Period
Defect Liability Period is a warranty of project that given by the contractor to the client that may be
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1, 2 or 5 year, within a warranty period if any defects in a project that repair by the contractor.
During Defect Liability Period, contractor repair all the defects and don’t run away that’s why client
deduct retention money from each and every construction bill that submit by the contractor to
client during the construction work.
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Retention Money
Retention Money is the amount that’s retain or hold by the client to the each and every
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construction bill of contractor i.e., max. 5% as per the clauses of work order.
During Defect Liability Period, contractor repair all the defects and don’t run away that’s why client
deduct retention money from each and every construction bill that submit by the contractor to
client during the construction work.
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After the completion of defect liability period, client refund retention money to the contractor.
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Successful Completion Certificate (SCC)
Successful Completion Certificate is given by client to contractor after the completion of defect
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liability period and at this time retention money is also released by client.
This certificate is very important for contractor as an experience to participate or bid in new
tenders.
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Highway Billing Process
Client bill preparation by contractor
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Submission to PMC
Scrutiny & Certification by Authority Engineer of PMC
Final checking by MORTH, NHAI & PWD Road Department
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Payment
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Document required for preparation of
client bill
Approved RFI of work done Procure Material Bills
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RFI measurement summary Manufacturer’s Test Certificate (MTC)
Detail Bill Invoice Abstract Sheet Royalty Challan of Procured Material
Bill Verification Sheet or Bill Summary Labor Compliances
Checklist Price Escalation Sheet
Site Test Reports Mobilization Advance Recovery Sheet
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Lab Test Reports Covering Letter or Request Letter
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Highway Billing in the case of
Item Rate Contract
There are two types of bill-
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1. RA Bill – Running Account Bill
2. Final Bill
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RA Bill (Running Account Bill)
As per name running account bill is the bill in which amount of bill is running through
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out the project.
Running account bill means :- value till last bill + this bill = cumulative value
During the construction work, Contractor submit RA bill of work done each and every
month as per terms & conditionsreinforceqst.com
of contract agreement to authority engineer.
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Final Bill
After the completion of project, contractor submit the last RA bill of work done as per
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terms & conditions of contract agreement to authority engineer.
Last RA Bill of the project is known as Final Bill.
After the submission of final bill no one amount will consider by the authority so
contractor should cross check allreinforceqst.com
the RA Bills and it’s due amount of work done.
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Cost Schedule for Highway Project
Road Work including culverts, widening & repair of culverts
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Minor Bridges, underpasses & overpasses
Major Bridge, ROB, RUB & Viaduct
Tunnel
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Other work
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Road Work
Earthwork up to the top of subgrade
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Earthwork to shoulder
GSB
WMM
Bituminous Base Course reinforceqst.com
Wearing Coat
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Minor Bridge, Underpass, Overpass,
Major Bridge
Foundation - Completion of the foundation work including foundation for abutment, pier & return wall.
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Substructure - Completion of abutment shaft, pier shaft, abutment cap, pier cap- pedestal, bearing
including return wall up to the top.
Super structure - Completion of superstructure including girder, deck slab
Approaches & ancillary work – Completion of reinforce earth wall ready for use, wearing coat,
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expansion joint, handrail, crash barrier, stone pitching, protection work, road sign, marking and tests
on completion in all respect
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Tunnel Work
Tunnel Portals
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Earthwork excavation for tunnel
Rock bolting, waterproofing & other tunnel support system
Shotcrete
Tunnel lining work
Drainage work
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MEP work including ventilation & fire protection work
Other miscellaneous work including tunnel control system
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Other Work
Toll Plaza
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Road side drain – line & unlined drain
Road furniture
Project facilities – bus way, way side amenities including all internal roads & other to be
specified
Electric poles
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Utility ducts
Noise barrier https://app.reinforceqst.com
Other Work
Boundary wall
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ATMs
Rain water harvesting
Road side plantation including horticulture in way side amenities
Safety and traffic management during construction
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Other miscellaneous works including connecting roads and junctions under great seperater
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