Bonus for early completion of work
● New initiative to encourage the Contractors to complete works as early as possible by offering incentives in the form of Bonus.
● Contractor is entitled a Bonus for early completion of work i.e., before the prescribed date for completion.
● New clause in GCC for works - 17C of GCC - General Conditions of Contracts for Works
● Bonus - 1 % of Contract value for each 30 days early completion of work. ● Less than 30 days shall be ignored for working out the Bonus
● The completion date reckoned - the date of issuance of completion certificate by the Engineer.
● Maximum Bonus is 5 % of the original contract value.
● Conditions for availing Bonus by Contractors are :
1. Open Tenders having advertised value of more than Rs. 50 Crores
2. Original period of completion is 12 months or more
3. No reduction in original scope of work by more than 10 %
4. No extension granted on either Railway or Contractor’s account
● This clause is very good. Because it encourages the contractors for early completion of work for availing the Bonus to the extent of 5 % of Contract value. Also avoids the time overruns and cost overruns in Projects.
Suggestion is the Bonus shall be 0.25 % for every one week in lieu of 1 % for every 30 days period.
A work costing 60 Crores whose completion period is 18 months was awarded to the Contractor ABC Co, ltd on 01.10.2019. The completion date for this work is 31.03.2021. The scope of work is not reduced during the contract period. If the contractor completes the work on 15.12.2020, what is the eligible amount of Bonus entitled to the Contractor?
Saving period: 31.03.2021 Minus 15.12.2020 = 116 days.
Bonus is 1 % for every 30 days subject to maximum of 5 %
Bonus calculation = 3 % of 60 Crores = Rs. 180 Lakhs
Material for MCQ
Bonus is 1 % of Contract Value for each 30 days of early completion of work.
Maximum Bonus is 5 % of Contract Value
Original period of Completion is 12 months or more
Advertised value of Tender should be Rs.50 Crores and more
Eligible for Open Tenders only
No reduction in original scope of Work by more than 10 %
No extension granted either on Contractor’s account or on Railway’s Account
Less than 30 days is ignored for calculation of Bonus
New Clause in GCC for Works - 17C