Railway Accounts Department Examinations

Showing posts with label Performance Guarantee. Show all posts
Showing posts with label Performance Guarantee. Show all posts

Sunday, August 16, 2020

Additional PG - Performance Guarantee calculation -If the Tenderer offered lower than the Tender Value

 Additional Meaning - YouTube

Additional PG calculation

If the Tenderer offered lower than the Tender Value

 

 

excerpt of Para 16 (4) (h) of Revised GCC for Works-July 2020  Click for Revised GCC 2020

 

 

"The tenderer who has offered lower total cost as compared to tender value by more than 10 %, shall be required to submit additional Performance Guarantee of value equal to half the percentage of tender value by which offer is lower than 10%. (e.g. in a tender costing Rs 100, if contract value is Rs 80, additional Performance Guarantee shall be [0.5x{(100-80)-10}] percentage of tender value.)"

 

 

Object : To discourage the Contractors to quote the unreasonable rates and doing incomplete  work  or abandon the work after awarding the same, because of non viable/non feasible rates.

 

Example A:

Tender value is Rs 100.  Tenderer offered rate is Rs 80 only. So calculation of PG is as follows:

 

PG Rate on Contract/Tender Value

Calculation

PG Amt

(Rs)

Original PG

5% of Contract Value Rs. 80

5/100x80

4.00

Additional PG

0.5 % of 10 i.e., {(100-80)-10} (additional

Performance  Guarantee of value equal

 to half the percentage of  tender value

by which offer is lower than 10%.

0.5/100x10

0.05

Total PG

 

 

4.05

 

Example B:

Tender value is Rs 100.  Tenderer offered rate is Rs 70 only. So calculation of PG is as follows:

 

PG Rate on Contract/Tender Value

Calculation

PG Amt

(Rs)

Original PG

5% of Contract Value Rs. 70

5/100x70

3.50

Additional PG

0.5 % of 20 i.e., {(100-70)-10} (additional

Performance  Guarantee of value equal

 to half the percentage of tender value

by which offer is lower than 10%.

0.5/100x20

0.10

Total PG

 

 

3.60

 

In Simple , calculation of Additional PG is 0.5 % of  (90 % of Tender Value - Accepted Offer value)

Note:

If the Lowest quote is Rs. 90 and above against Tender Value of Rs. 100, the PG is just 5 % of Contract Value only.

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Saturday, April 20, 2019

Performance Guarantee


Performance Guarantee
(as per GCC 2018)  Click here
Ø   Introduced in lieu of risk action procedure (contracts rescinded due to failure of contractors)

Ø The successful bidder shall have to submit the Performance Guarantee - 5%  of the Contract value

Ø    Time limit: within 21 days from the date of issue of Letter Of Acceptance (LOA).

Ø    Extension of Time limit: Beyond 21 days and up to 60 days from LOA by the Authority who is competent to sign the contract agreement.

Ø    Penal interest of 12% per annum  - beyond 21 days, i.e. from 22nd  day after the date of issue of LOA.

Ø    If 60th day happens to be a declared holiday in the concerned Railway office, submission of PG can be accepted on the next working day.

Ø    PG shall be valid up to the Date of completion of the work plus 60 days.  In case the completion time extended, the validity of PG extended to cover such extension plus 60 days.

Ø    If contractor fails to submit PG,

A.    the contract shall be terminated

B.     b)  forfeiting EMD and other dues, if any payable against that contract. and

C.      c) the failed contractor shall be debarred from participating in re-tender for that work.

Ø    After work started, whenever the contract is rescinded or withdrawn,
A.  the security deposit shall be forfeited
B.   the Performance Guarantee shall be encashed and
C.    the balance work shall be got done independently without risk and cost of the failed contractor.  (This is the main objective of introducing the Performance Guarantee procedure. Before that, the balance work is to be carried out by inviting fresh tenders and if any higher charges on account of the fresh tender, the same is at the risk and cost of failed contractors)
D.  The failed contractor shall be debarred from participating in the tender for executing the balance work.

Ø    Variations to the value of Contract - PG

A.   Up to 25 %  increase of original contract value - No additional PG.
B.   Beyond 25 % increase of original contract value - Additional
5 % PG for the excess value over the original contract value shall be deposited by the contractor.
C.   If the value of contract decreases by 25% of original contract value , PG amounting to 5% of decrease in the contract value shall be returned to the Contractor on the basis of his request.

Ø    The Performance Guarantee (PG) shall be released after physical completion of the work based on 'Completion Certificate' issued by the competent authority .

Ø    The Security Deposit shall, however, be released only after expiry of the maintenance period and after passing the final bill based on 'No Claim Certificate' from the contractor.

Performance Guarantee - various forms for submission

(i)     A deposit of Cash;
(ii)    Irrevocable Bank Guarantee;
(iii)   Government Securities including State Loan Bonds at 5% below the market value;
(iv)   Deposit Receipts, Pay Orders, Demand Drafts and Guarantee Bonds. These forms of Performance Guarantee could be either of the State Bank of India or of any of the Nationalized Banks;
(v)    Guarantee Bonds executed or Deposits Receipts tendered by all Scheduled Banks;
(vi)   A Deposit in the Post Office Saving Bank;
(vii)  A Deposit in the National Savings Certificates;
(viii) Twelve years National Defence Certificates;
(ix)   Ten years Defence Deposits;
(x)    National Defence Bonds and
(xi)   Unit Trust Certificates at 5% below market value or at the face value whichever is less.
(xii) Also, FDR in favour of FA&CAO (free from any encumbrance) may be accepted.
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Saturday, April 28, 2018

Differences between SD and PG

DIFFERENCES BETWEEN

Security Deposit (SD)
Performance Guarantee (PG)
1.       In token for the due fulfilment of the contract
1. In token for the purpose of successful performance by the Contractor to execute the work. Introduced in lieu of risk action procedure (contracts rescinded due to failure of contractors) 
2.       EMD of successful tenderer will be retained as part S.D., balance will be recovered at the rate of 10% of the bill amount till the full Security Deposit is  recovered,

2.  Obtained from successful bidder after issuance of LOA, but within 60 days of issue of LOA.
a)      Within30 days from LOA – No interest
b)      31 to 60 days from LOA – penal Interest 15 % per annum
3.       Balance Security Deposit will be recovered only from the running bills of the  contract and no other mode of collecting SD shall be permitted
3.  Submit the Performance Guarantee in any of the forms i.e., Cash, Irrevocable Bank Guarantee, Govt securities, DDs of nationalized banks, Post office SB deposit, NSCs etc.
4.       There is no question of failing to submit the balance SD, because the same is recovered from running bills at the rate of 10% of bill amount till the full SD is recovered.
4.  In case the contractor fails to submit the requisite PG even after 60 days from the date of issue  of LOA, the contract shall be terminated duly forfeiting EMD and other dues, if any payable against that contract. The failed contractor shall be debarred from participating in re-tender for that work.

5.       Can be released subject to
A)     Physical completion of the work and Maintenance period if any.
B)      After passing Final Bill
C)      Obtaining the No Claim certificate from the Contractor
D)     Obtaining the No Dues certificate against   Contractor from the Executive
5.  Can be released immediately after physical completion of the work.

                Click here for article on PG

                              Performance Guarantee                          

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