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Site Records for Construction Contracts

On-Site Management & Monitoring During Construction

by Gursharan Singh C.M.I.I.A.

	Web www.auditnet.org

1.0 Introduction

1.1 Site Records are one of the most important records in any building and civil
engineering infrastructure construction contract. However, it is also one important aspect of project management and implementation that is seldom given any serious attention by the involved parties i.e. the project owner, the technical professionals, the contractor, the project supervisor and the relevant local authorities having jurisdiction over the project implementation. As long as the construction works proceed without any problems or mishaps, the Site Records may be given periodical attention regularly but this attention may only be superficial. Any minor deficiencies that may be observed may be treated as
not warranting any serious attention by the relevant officials involved in the management and implementation of the contract.

1.2 The Site Records will become extremely important in the event of any substantial changes to the scope of works for whatever reason that may cause delays and additional costs, any serious accident, natural disaster or claims by third parties. The Site Records will need to be referred to as source of information by the owners, contractors, investigators, authorities, relevant technical professionals and legal professionals in the event the claims are subject to any legal action. The objective would be to ascertain causes and identify those responsible. However, by then, it might be too late. Lack of comprehensive and accurate Site Records is one of the contributory reasons that the investigative authorities have yet to agree and conclude their findings and complete their reports for some of the past major construction disasters. Similarly legal action by claimants of any compensation for delayed contracts also are time consuming that have major financial implications and wastage of limited resources. Thus it must be emphasized that accurate and comprehensive Site Records should be maintained and kept up to date at all times and retained for as long as deemed appropriate for the respective project. The period could be a few decades for projects constructed in hilly sites, unstable soil conditions areas or in heavy populated urban areas.

1.3 Objectives of Site Records

2.0 The main objectives of maintaining comprehensive, accurate and up to date should be the following:
- Record & monitoring of contract implementation and physical progress
- Control over workforce [legality, need, attendance, and payroll]
- Materials management: in-coming used and balance on site
[Control on quantity of materials is as per need – usage of JIT concept]
- Management of Construction Plant/Machinery/Equipment
[Of type suitable for the works and on-site for period required]
- Compliance with prescribed controls, laws, regulations, specifications
and standards for materials
- Identifying possibilities of fraudulent claims situations
- Supporting information to examine the justification of any financial claims
- Evidence in the event of any problems and dispute
- Recording prescribed test records to ensure the integrity of the structures
- Ensure security measures for the site, materials, machinery and works
- Safety measures and safe site conditions for workers
- Maintaining validity, sufficiency and effectiveness of insurance policies
- Historical records for staff training purposes assigned to future projects
- Monitor visits by technical professionals, regulatory authorities & others

2.2 The above list of objectives should be reviewed periodically to ensure it is
comprehensive and relevant to the type of works and the company's activities.

3.0 Scope of Site Records

3.1 The scope of site records would be dependent on the type and location of a
construction project. However the more important records to be maintained shouldcomprise the below listed aspects:

- Site conditions - Site dairies - Measurement books
- Facilities at site - Security and Safety measures
- Weather conditions - Site workers and supervisors
- On-site trainees - List of plant, machinery & equipment on site
- Acceptable materials received, used and balance
- Materials tested, approved and rejected
- Site visits by S.O. & technical professionals
- Site inspections by regulatory authorities and others
- Work program and progress charts
- S.O. Instructions
- Contractor’ enquiries/requests & response
- Reports of accidents or near accidents, thefts, damages, penalties
- Projects adjoining the construction site.

[Note: Explanatory Notes regarding the scope, usage and importance of these aspects are detailed in the attached Appendix ‘A’]

3.2 The above list should be reviewed periodically to ensure it is comprehensive and includes all records that may have any impact or cost implication on the contract or company. The Site Records should be maintained in chronological order, properly indexed where appropriate, and kept safely for period until the works are handed over the clients or until all outstanding matters have been settled or as decided by the company.

4.0 Responsibility for Maintaining of Site Records

4.1 It is normally the responsibility of the main contractor to keep the site records. However, it is the responsibility of the client's S.O. to ensure that the site records are maintained and are comprehensive, accurate and up to date. The technical professionals, internal auditors and other agents of the client, contractor and regulatory authorities should also examine the site records periodically to ensure their correctness.

4.2 The client should keep the site records on completion of the contract and settlement of all dues In the event that the contractors wants to retain the site records, the client should obtain a list of the records and a confirmation that the site records will be kept safely for a mutually agreed period and the originals made available to the client in case of need.

5.0 Usage of Site Records
[By Clients’ Technical Professionals]

5.1 The S.O. and the client's technical professionals can use the site records for
- Implementation and monitoring the physical progress of the works as per schedule
[Recommend remedial measures in the event of delays and bottlenecks]
- Substantiate that prescribed specifications are complied with
- Ensure that relevant laws are complied with
- Preparation of periodical reports and computation of interim claims]

[Contractor’s Site Professionals]

They should ensure that the scope and extent of the Site Records are also commensurate with their own requirements vis-à-vis the works.

[By Internal Auditors and Financial Professionals]

6.0 The Internal Auditors should be especially interested in the information contained in the site records as it can be used for efficient audit. Another benefit is that the information can be used to confirm that the S.O. and the technical professionals have visited the site and verify the accuracy of their claims for such inspection visits. Further, he can confirm the reasonability of the quantum of recommended interim payments for work done and materials on site can be substantiated with evidence. Variation orders for any changes to the scope of contract and re-measured work can also be verified.

7.0 Conclusion

7.1 The importance of site records should never be ignored. The need and value will only be realized in the event the constructed project develops any major flaws or defects as has happened in the several project failures in the past. Absence of comprehensive and accurate site records have been contributory factors in hindering the regulatory and investigative authorities to ascertain the causes of the failures and thus completing their reports for submission to the relevant authorities. Consequently, the effected innocent parties who own the whole or sections of the collapsed building may not have been able to claim any compensation for their losses.

7.2 The site records can help to protect or minimize liability of the building owner, developer, contractors and the relevant authorities against blame and possible financial claims by assisting in the identification of the parties responsible for the defects and deficiencies in the works. Thus the maintenance of comprehensive, accurate and complete site records and their safe custody during the post construction period is the common responsibility of all the involved parties.

All involved parties should ensure that Site Records are maintained & comprehensive, accurate and up to date. Site Records are Monitoring Tools & Internal Controls that assist Implementers in Efficient Management and Internal Auditors Effective Audit. ***********************************************************************

APPENDIX ‘A’ [Site Records]

Explanatory Notes regarding the Scope, Usage and Importance of the Aspects

[a] Site conditions
[i] Notes are made about the general conditions of the construction site that includes lighting, drainage, fencing, the orderliness of the stacking of building materials & their accessibility when required for usage, separation of non-inflammable and inflammable materials, provision of special storage conditions for sensitive components, condition of scaffolding, etc.
[b] Site diaries
The site diaries are maintained by individual supervising officers at the construction site to record actual rate of progress of individual scope of works. They are used to monitor the performance of the individual sectional scope of works and indirectly the productivity of the individual workers. This is of particular importance in the case of infrastructure contracts such as highways where the work sites are far apart and at several locations.
[c] Measurement books
These are used to record the actual daily progress of implemented physical work in the sectionalized area or work. The information is then summarized into weekly progress and later the monthly progress reports. There are two main benefits that can be obtained from the information recorded. These are:
[i] The information is used to compute the quantum of progress/interim payments.
[ii] The monthly summarized progress rate is then used to compare with the planned progress as shown on the ‘Work Programme’. Any observed delays can be highlighted and the causes ascertained for taking of appropriate action to rectify the situation.
[Note: Particular attention should be given to works that involve multiple activities such as ‘Piling’ that would involve ‘Supply’, ‘Drive’, ‘Cut’ and ‘Joints’ as combining them in as a single work for which the a single rate may be provided in the Bills of Quantities that could result in excessive payments.]

[c] Facilities at site

The following information is generally recorded:

[i] Accommodation for workers and the adequacy of the basic necessities.

[ii] Provided utilities [light & water], fire extinguishers, first aid boxes, communications items [phone, fax, photostatting], computer & printers, audio/visual items, notice boards, programmed and actual progress charts, etc.

[d] Security and Safety measures

[i] The information to be recorded would include, among others, the Security and safety of equipment/installations, procedures for incoming/outgoing persons, materials, machineries, and contact numbers of relevant authorities [hospital, fire brigade, police, utilities companies and officers within the organizations of the Contractors & Client].

[e] Weather conditions

[i] Daily weather conditions are recorded such as rainfall and temperature and its duration and intensity. This is important as certain types of works cannot be done during and after rains whereas others cannot be done during hot temperatures. As an example earthworks and concreting works cannot be implemented during rain and after some time when the site is dry for work to be implemented. Also machineries may not be able to work if the site is flooded. In the case of welding works of rail tracks it is essential that the work be done before the temperature goes beyond a certain degree.

[f] Site workers and supervisors

[i] Particulars of the workforce on site is recorded to ensure that the workers are legal and possess the prescribed certificates [KWSP, SOCSO, CIDB, Work Permits for foreigners, etc], have the relevant expertise for which they are employed, the duration of the need and in numbers that are optimum for the works to be implemented. The same would be applied to the supervisors. The records for construction workers would be maintained on a daily basis whereas for permanent status supervisory staff all the information may not be necessary for daily recording. This information will ensure that the labor costs are at optimum levels and that prescribed laws are complied with.
.
[g] List of plant, machinery & equipment on site

[i] Particulars about the vehicles, plant, machinery, equipment such as registration numbers, type and capacity and their function would be recorded. This will ensure that they are in working order, the number & types are compatible with the scope of works and are at the site for the optimum duration. The information will assist in their procurement and usage on a cost-efficient basis.

[h] Construction materials received, used and balance

[i] The records will ensure that materials are procured on the JIT concept resulting in materials and quantities being procured when required. This will result in better materials management without holding costs for excessive quantities that could also be subject to pilferage.

[i] Materials tested, approved and rejected

[i] It is important that the construction materials are as per prescribed standards and specifications. Random testing of the materials to be used in the construction will ensure compliance, compatibility to the needs and structural integrity of the works. All test records will be maintained for reference. Appropriate remedial action can be taken promptly to ascertain the causes in the event of failures that exceed the industry norms to ensure the structural quality of the works. This is particularly important in the case of items involving the use of concrete such as piles, hardstands, etc. and also in cases where there are joints using steel and other metals.

[j] Visits by technical professionals, inspections by regulatory authorities/others

[i] Construction sites are regularly visited by the supervising professionals and at irregular intervals by the regulatory authorities and other professionals including the internal auditors. The particulars, dates and times of such visits should be recorded. In addition, notes should be made by the visitors in the event of any directions, comments or suggestions for review and response, if any, by the relevant parties representing the Client & contractors. Verbal directions should be noted and subsequently recorded in formal correspondence for management decisions. This is particularly important if there is financial or completion period implication to any of the contracting parties.

[k] Work program and progress charts

[i] The ‘Works Program’ provides a bird’s eye view of the status of the progress of works. This is reflected in the progress charts that show the planned and actual progress. These should be maintained current and up to date if they are to be effective and serve the intended purpose.

[l] S.O. Instructions

[i] The S.O. is the representative of the Client and is the person who is responsible for the progress of the works. The contractor is represented by his Site Agent who responsible for the implementation of the contracted works. It is normal that there would be instances where there would be need for changes in specifications, scope of works, delays, etc. that would result in changes/modifications to what has been agreed and possible delays. The S.O. would then give instructions that could have financial implications. These instructions could increase or decrease the contract value. The supervising professionals are expected to be ethical and honest. However, as an added internal control It is important that the Internal Auditor of the client pay special attention where the instruction could result in reduced costs whereas the contractor’s Internal Auditor would pay special attention to instructions that would result in increased claims.

[m] Contractor’s enquiries/requests and Client’s responses

[i] The Client should give prompt response to any enquiries/requests as delays can be used by the contractor for penalty free extension of time and justify additional claims for delays. Chronological data should be recorded.

[n] Reports of accidents, near accidents, thefts and damages

[i] Laws make it mandatory that all accidents are reported to the relevant authorities. Similarly internal procedures require reporting of all cases of thefts and damages to the works. These are essential to take appropriate measures to prevent any such future cases.

[o] Projects adjoining the construction site

[i] Records should be made of any information pertaining to cases where there is a possibility that construction works can have adverse effect on existing properties that are in the vicinity of the construction works. This would result in taking remedial action that would result in minimizing the adverse effects and possibility of any financial claims at some times in the future. Similarly, notes should be made of any third party construction project near the vicinity of the works that can have adverse impact on the works so that the other party can be informed of the consequences in the event of any adverse impact and possible financial claims.

[p] On-site trainees

[i] Governments generally provide financial incentives where clients employ people with a view to provided on-site training to new works. Records would enable the Client to take advantage of such incentives.

[Note: Above are some of the aspects that should be recorded in the Site Records. However, the extent will depend on the type of project and its location. It is possible that not will be necessary whereas there may be other aspects that may need to be recorded. The decision on the final list of aspects would be with the Superintending Officer who is responsible for the implementation of the works. The contractor/sub-contractors is at liberty to increase the scope to protect their individual interests. Internal Auditors of both parties can use these site records to ensure an effective audit and contribute to effective management of future contracts.]

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GSK/May 06

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