Model Answer: Summer 2018 Subject: Contracts and Accounts


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MAHARASHTRA STATE BOARD OF TECHNICAL EDUCATION

(Autonomous)

(ISO/IEC - 27001 - 2005 Certified)

Model Answer: Summer 2018

Subject: Contracts and Accounts

Sub. Code: 17603

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Important Instructions to examiners:

1) The answers should be examined by key words and not as word-to-word as given in the model answer

scheme.

2) The model answer and the answer written by candidate may vary but the examiner may try to assess the

understanding level of the candidate.

3) The language errors such as grammatical, spelling errors should not be given more importance. (Not

applicable for subject English and Communication Skills.)

4) While assessing figures, examiner may give credit for principal components indicated in the figure. The

figures drawn by the candidate and those in the model answer may vary. The examiner may give credit

for any equivalent figure drawn.

5) Credits may be given step wise for numerical problems. In some cases, the assumed constant values may

vary and there may be some difference in the candidate‟s answers and the model answer.

6) In case of some questions credit may be given by judgment on part of examiner of relevant answer based

on candidate‟s understanding.

7) For programming language papers, credit may be given to any other program based on

equivalent concept.

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Que. Sub. No. Que.

Model Answers

Marks Total Marks

Q. 1 (a) Attempt any THREE of the following:

12

(i) State any four functions of a Junior Engineer.

Ans. Functions of Junior Engineer (JE):

1. Supervision of work in his charge.

2. Maintain attendance of daily worker, labors.

3. Taking measurement of all work in Measurement Book.

1 each

4. Preparation of bills running and final bills for work in his charge. (any

4

5. Prepares estimates for all types of works in his section.

four)

6. Carry out field survey for proposed project.

7. Carry out half yearly check of all stores in his charge and submit

report to SDO.

8. Report to higher authorities for irregularities in contract,

specification.

9. Shortage of supply of department materials or any difficulty

during execution.

(ii) List out any four requirements of a valid contract. Ans. Requirements of valid contract:
1. Contract should be in writing and should be signed by both the parties i.e. owner and contractor.
2. The subject matter of agreement must be legal and definite. 3. If situation arises the contract can be enforced in court of law. 4. Parties should be competent enough to carry out work. 5. Both parties must give their free consent to do work. 6. Contract should be attested by responsible officer.

1 each

(any

4

four)

(iii) Differentiate between item rate contract and percentage rate contract.

Page | 1

MAHARASHTRA STATE BOARD OF TECHNICAL EDUCATION (Autonomous)
(ISO/IEC - 27001 - 2005 Certified)

Model Answer: Summer 2018

Subject: Contracts and Accounts

Sub. Code: 17603

---------------------------------------------------------------------------------------------------------------

Que. Sub. No. Que.

Model Answers

Marks Total Marks

Q. 1 Ans. Sr. No.

Item Rate Contract

Percentage Rate Contract

1. In this contract, the contractor In this contract, the contractor
agrees to work as per the rates agrees to carry out the work at a quoted by him for each item. certain percentage below or

above the estimated cost.

2. This is useful when the quality This is useful for the work of all

of work is required and also nature with no item-wise rates.

quantities of work to be

executed are not known

1 each 4

previously.

(any

3. Suitable for most of public Suitable for all type of four)

works executed by government government as well as private.

departments.

4. It is difficult to prepare It is easy to prepare

comparative statement.

comparative statement.

5. Extra items can be cause of It allows extra items. dispute

6. Contractor can unbalanced tender.

submit No Scope for contractor to submit unbalanced tender.

(iv) Define ‘Tender’ and list out various types. Ans. Tender: The tender is defined as an offer in writing for execution of
certain specified work or for supply of specified materials subject to 2

certain terms and conditions such as rates, time limits etc.

Types of Tender:

1. Local tender. 2. Global tender. 3. Open tender. 4. Limited tender.

2

(any

4

four)

5. Negotiated tender. (v) Ans. State any eight conditions when the lowest tender is rejected.
Conditions when the lowest tender is rejected:
1. When tender is not submitted in particular form sold by department.

2. The lowest tenderer may lack in experience for work. 3. Earnest money is not enclosed along with tender. 4. Unsatisfactory reputation of lowest tender. 5. In adequate finance to execute work.

½

each

(any

4

eight)

6. Inadequate connection of fair rates is not received.

7. Tender is not signed by contractor. 8. If any page is removed from document. 9. If contractors is black listed by any department.

Page | 2

MAHARASHTRA STATE BOARD OF TECHNICAL EDUCATION

(Autonomous)

(ISO/IEC - 27001 - 2005 Certified)

Model Answer: Summer 2018

Subject: Contracts and Accounts

Sub. Code: 17603

---------------------------------------------------------------------------------------------------------------

Que. Sub. No. Que.

Model Answers

Marks Total Marks

Q. 1 (b) Attempt any ONE of the following:

6

(i) Explain the PWD method of carrying out work by departmental

method.

Ans. Employing labour on daily wages: 1. In this method department purchase material directly from supplier

and engage labour on daily wages on muster as and when required.

2. Daily labour muster roll system, workers such as mason,

carpenters labour etc. are employed directly by department on

daily wages.

3. The material is supplied by department or can be purchased

directly from market.

4. The attendance of total number of labour employed is maintained

in muster roll form No.21 by Junior Engineer and it is checked by

1each

Assistant Engineer.

(any

6

5. When muster roll is closed for payment it is necessary to measure six)

the work during that period and enter it in measurement book.

6. The amount paid, total work done etc is also entered. Then

muster is submitted to competent authority who checks it and

passes it for issuing payment order.

7. The amount is then given to site engineer for making payment

to labour in the form of advance.

8. The payment is made weekly, fortnightly or monthly as per

requirement.

State the importance of measurement book. Write the rules for (ii) entering entries in measurement book.
Ans. Importance of Measurement Book: 1. It is very important account record. 2. All the payment of all works is done based on entries done in 1 each measurement record.

Rules for entering entries in Measurement Book:

1. Entries are made by J.E. and certified by S.D.O or A.E

6

2. All entries are recorded in ink directly in measurement book B.

3. No entry is allowed to be erased. 4. If any correction is required, it must be initialed by the officer who made the measurement. 5. Measurements are taken in the presence of contractor, and his

1 each (any four)

signature is taken in measurement book.

6. Entries should be recorded continuously and no blank pages left or

turn off. Any pages left blank should be cancelled by diagonal lines

and signed by authority.

The measurement book contains name of work, name of contractor,

date of measurement, location, date of work order, and number of

measurements.

Page | 3

MAHARASHTRA STATE BOARD OF TECHNICAL EDUCATION

(Autonomous)

(ISO/IEC - 27001 - 2005 Certified)

Model Answer: Summer 2018

Subject: Contracts and Accounts

Sub. Code: 17603

---------------------------------------------------------------------------------------------------------------

Que. Sub. No. Que.

Model Answers

Marks Total Marks

Q. 2

Attempt any FOUR of the following:

16

(a) Define administrative approval and technical sanction. Ans. Administrative Approval: For any work, it is necessary to take
formal acceptance with respect to cost and work is called as 2 administrative approval. For this the department sends a proposal to government for taking up the work. After considering all aspects like feasibility of project, financial aspect, government accepts proposal.

Technical Sanction: Technical sanction means the sanction of the

detailed estimate, design, rates and cost of work. It is sanctioned by 2

4

competent authority. The work is taken for the execution only after the

technical sanction. The government has delegated powers of technical

sanctions to the officers in PWD.

(b) Draw administrative setup of PWD. Ans. Administrative setup of PWD:

4

4

Page | 4

MAHARASHTRA STATE BOARD OF TECHNICAL EDUCATION

(Autonomous)

(ISO/IEC - 27001 - 2005 Certified)

Model Answer: Summer 2018

Subject: Contracts and Accounts

Sub. Code: 17603

---------------------------------------------------------------------------------------------------------------

Que. Sub. No. Que.

Model Answers

Marks Total Marks

Q. 2 (c) State advantages and disadvantages of lumpsump contract. Ans. Advantages of lumpsump contract:

1. Total cost of project is known before completion of work. 2. Progress of work is fast. 3. Owner need not require to appoint staff to maintain accounts. 4. Contractor can derive more profit by proper planning.

1 each (any two)

5. Detailed measurement of work is not required except in case of

addition and alteration. 4

Disadvantages of lumpsump contract: 1. This method is suitable for small work. 2. For extra items contractor may demand higher rates. 3. Extra item can be cause of dispute between owner and contractor. 4. Quality of work is not assured. 5. Contractor may quote higher rate and thus higher tendering is
possible.

1 each (any two)

1.
(d) Which are the conditions when ‘Negotiated Contract’ is suitable for work?
Ans. Conditions when ‘Negotiated Contract’ is suitable for work: 1. It is suitable when tender is not called for contract. 2. The work is given to contractor by mutual negotiation between parties but within selected contractor after studying their previous 1 each 4 experience and reputation. 3. This type of contract is suitable where time is important. 4. This type of contract is suitable where work has to complete at short notice.

Define ‘ Secured advance’. Write maximum limit for it. (e) Secured advance: An advance payment made to the contractor on the Ans. basis of the security of materials brought by the contractor to the site
of work under construction is called as secured advance. 2

Maximum limit: Authority to make the secured advance is in the

4

hand of Divisional Engineer up to the amount not exceeding 75% of

the value of the materials brought to the site by contractor.

2

Page | 5

MAHARASHTRA STATE BOARD OF TECHNICAL EDUCATION

(Autonomous)

(ISO/IEC - 27001 - 2005 Certified)

Model Answer: Summer 2018

Subject: Contracts and Accounts

Sub. Code: 17603

---------------------------------------------------------------------------------------------------------------

Que. Sub. No. Que.

Model Answers

Marks Total Marks

Q. 2 (f) What is first and final payment? Which form number is used for

it?

Ans. First and Final Payment:

A single payment made for a small job or small work on its

completion is called as “first and final payment”.

This type of payment is usually made or applicable for small work

only. For example, construction of sanitary block for school building,

component wall construction, septic tank construction, ornamental 3

grill work, demolishing existing structure etc. are the examples of

small work for which the first and final payment are made to the

4

contractor.

Form number 24 is used for it.

1

Q. 3

Attempt any FOUR of the following:

16

(a) Explain with example ‘Unbalanced Tender’. Ans. Unbalanced Tender:
In case of unit price contract the contractor has to quote his rate for each item. If these rates quoted by contractor are reasonable, the tender is known as balance tender. But sometimes the contractor puts up higher rates for certain items and lower rates for other items so that 2 the total amount of tender remains practically unaffected, such a tender is known as unbalanced tender. The contractor quotes higher rates for those items which are to be completed in the early part of work so that he gets slightly excessive payment from which he can build up working capital.

Example

Item Particulars of Qty.

Tendered rates in Rs.

No.

Item

P

Q

R

1. Excavation in 500/m3 Rs.

Rs. 12/-m3 Rs. 30/-

soft soil

40/-m3

m3

2. Excavation in 300/m3 Rs.

Rs. 25/-m3 Rs. 60/-

soft

40/-m3

m3

3. Excavation in 200/m3 Rs.

Rs. 80/-m3 Rs.

2

4

hard

40/-m3

100/-m3

4. C.C. bedding 100/m3 Rs.

Rs. 500/- Rs.

1 : 4 : 8

400/- m3

300/-m3

m3

5. Plastering in 800/m2 Rs.

Rs. 20/-m2 Rs. 8/-

C.M.

10/-m2

m2

1 : 4 6. Oil painting

500/m2

Rs.

Rs. 10/-m2 Rs. 5/-

10/-m2

m2

Total for the

Rs. Rs.

Rs.

items

95.000 1,00,500/- 1,11,900

/-

/-

Remarks

Lower Second Third

Page | 6

MAHARASHTRA STATE BOARD OF TECHNICAL EDUCATION

(Autonomous)

(ISO/IEC - 27001 - 2005 Certified)

Model Answer: Summer 2018

Subject: Contracts and Accounts

Sub. Code: 17603

---------------------------------------------------------------------------------------------------------------

Que. Sub. No. Que.

Model Answers

Marks Total Marks

Q. 3

Here the contractor P has quoted very high for Item No. 1 and very

low rate for Item No 3. He expects by his judgment and experience

after visiting the site, that the quantity of excavation in soft exceeds

the estimated quantity double and the excavation in hard rock and soft

rock is negligible.

(b) Define ‘Earnest Money’. When it is refunded? Ans. Earnest Money: While submitting tender contractor has to deposit
certain amount about 1 to 2% of estimated cost with department. This 2 amount is termed as earnest money deposit.

Refund of Earnest Money: After opening of tender earnest money

deposit of all unsuccessful contractors is refunded and of successful 2

4

contractor it is converted into security deposit.

(c) Define ‘Arbitration’. Why it is needed? Ans. Arbitration: The process of settling the dispute between owner and 2
contractor is called as arbitration.

Need of Arbitration:

1. During execution of work owner and contractor may come across

situations where disputes may arise. To settle this disputes arbitration

is needed.

2

4

2. Arbitration is needed for fair resolution of a dispute by an impartial

tribunal or an experienced person.

(d) List the documents to be submitted at the time of registration as a

contractor.

Ans. Documents required for registration of contractor:

The applicant has to submit the following documents along with his

application.

1. Latest income tax clearance certificate.

2. Proof of financial status.

3. Solvency certificate.

½

4. List of machinery with their condition.

each

4

5. List of technical staff employed along with qualification and

experience.

6. Professional capacity and experience certificate.

7. Attested copies of partnership deed, if any.

8. Registration fee.

(e) Suggest the type of contract suitable for:

(i) Purchase of office furniture.

(ii) Only one contractor for particular work is available in the

area.

Ans.

Suitable type of contract:

i. Material supply contract.

2 each 4

ii. Negotiated contract.

Page | 7

MAHARASHTRA STATE BOARD OF TECHNICAL EDUCATION

(Autonomous)

(ISO/IEC - 27001 - 2005 Certified)

Model Answer: Summer 2018

Subject: Contracts and Accounts

Sub. Code: 17603

---------------------------------------------------------------------------------------------------------------

Que. Sub. No. Que.

Model Answers

Marks Total Marks

Q. 4 (a) Attempt any THREE of the following:

12

(i) Enlist various modes of payment to contractor. Ans. Following are the modes of payment to the contractor:
1. Interim payment. 2. Advance payment. 3. Secured advance. 4. On account payment. 5. First and final payment. 6. Retention money. 7. Reduced rate payment. 8. Final payment. 9. Mobilization advance.

1 each

(any

4

four)

(ii) Describe the process of submission of tender.

Ans.

Process of submission of tender:

The contractor is required to submit their tender on or before the date

and time mentioned by department / authority. Tender is submitted in

envelopes marked as I and II.

1

Envelope I: It contains, 1. Covering letter to tender. 2. This envelope contains earnest money deposit in the form indicated in the notice of invitation to tender. 3. Income tax clearance certificate. 4. Solvency certificate from bank. 5. Certificate of registration as contractor. 6. Details of technical personal as contractor. 7. List of work of similar nature and magnitude carried out by 2 tenderer. 8. Details of plants and machinery available. 9. Complete details of work in hand at the time of submission of tender. 10. Details about firm. Covering letter to tender.

Envelope II: This envelope contains the priced tender form.

1

4

Cover: It contains all above two envelopes and it is properly sealed and endorsed on outside face tender for name of project.

(Note: Students write three envelopes process of submission of tender should be considered.)

Page | 8

MAHARASHTRA STATE BOARD OF TECHNICAL EDUCATION

(Autonomous)

(ISO/IEC - 27001 - 2005 Certified)

Model Answer: Summer 2018

Subject: Contracts and Accounts

Sub. Code: 17603

---------------------------------------------------------------------------------------------------------------

Que. Sub. No. Que.

Model Answers

Marks Total Marks

Q. 4 (iii) Enlist various types of specification and explain any one in detail.

Ans. Types of specification:

1. Brief specification.

2. Detailed specification.

½

3. Standard specification.

each

4. Manufacturers specification.

1. Brief specification: The general specification used for estimating the project is the brief specifications. The specification which gives the brief description of various items of work, specifying the 2 materials, quantities, proportion of materials and gives general idea about the whole work.

OR

2. Detailed specification: The specification in which detailed information of the various quantities of materials, procedure of 2 workmanship to be adopted, nature and class of work is mentioned. The details specification describes the item of work in details, accurately and complete in all respects in relation to the drawings of the work.

OR

3. Standard specification: Detailed specifications for various works are drawn up by an engineering department and these specifications 2 are printed and used as a standard specification. Hence most of the items in works are made to standardized specifications.

OR

4. Manufacturers specifications: This type of specifications in which 2

4

the properties of products such as strength, thickness, depth, elasticity,

chemical composition etc. are mentioned.

(iv) List out various factors affecting value of a property. Ans. Factors affecting value of a property:
1. Forces of demand and supply. 2. Cost of construction. 3. Increase in population. 4. Riots, war, flood and other natural calamities. 5. Improvement of public schemes. 6. Interest on banks. 7. Cost of labour. 8. Inflation. 9. Monopoly of a property in market. 10. Location of property. 11. Returns from property. 12. Life and age of building.

½

each

4

(any

eight)

Page | 9

MAHARASHTRA STATE BOARD OF TECHNICAL EDUCATION

(Autonomous)

(ISO/IEC - 27001 - 2005 Certified)

Model Answer: Summer 2018

Subject: Contracts and Accounts

Sub. Code: 17603

---------------------------------------------------------------------------------------------------------------

Que. Sub. No. Que.

Model Answers

Marks Total Marks

Q. 4 (b) Attempt any ONE of the following:

6

(i) Explain BOT project with respect to objectives, advantages and disadvantages.
Ans. B.O.T. B.O.T. is a form of project where government grants permission to private firm to construct and administrate certain public infrastructure by financing and authorizing them to pay off loans reclaim investment 2 by allowing them to collect tools, fees, rent as stated in contract and after concession period is over, ownership is transferred back to government.

Objectives of B.O.T.

1. To encourage private investment.

½

2. To promote foreign investment, techniques and technology in each

country.

Advantages of B.O.T.

1. Use of private sector financing to provide new source of

capital.



2. Accelerate the development of project.

3. Use of latest techniques and machineries for fast completion of

projects.

Disadvantages of B.O.T.

1. Not suitable for Small works.

2. Transaction costs are high.

3. The success of B.O.T. project depends upon successful rising 1½

6

of necessary finance.

(ii) What are the points to be confirmed before making final bill?

Ans. Points to be confirmed before making final bill:

1. The junior engineer should certify the satisfactory completion

of work.

2. All measurement should be taken accurately.

3. All entries in the measurement book with regards to

measurement and quantities of work are checked.

4. The description of item is according to the contract schedule.

5. The quantities executed are according to the sanctioned plans 1 each

and estimate.

(any

6

6. Arithmetical calculations of measurement of quantities of item six)

are verified.

7. When the bill is running account, then it is compared with the

quantities etc. with the previous bills.

Page | 10

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Model Answer: Summer 2018 Subject: Contracts and Accounts