Are you negotiating 23 commercial clauses comprehensively in your SITC Contracts?

This Article  outlines 23 must-negotiate clauses which are commercial in nature:

By addressing these factors in your contracts, you can protect project profitability, reduce disputes, and ensure successful execution

What is included in this Blog?   

Listing of clauses related to:

A)   Insurance and Indemnification (5)

B)   Communication and Reporting (3)

C)     Temporary Facilities and utilities(5)

D)    Performance Bank Guarantee PBG (5)

E)     Statutory Clearances and Compliance (5)

A) Insurance and Indemnification (5 clauses)

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   1 Deciding Types of Policies to be taken & responsibilities

   •      Contractor’s All Risk (CAR) Insurance — Covers damage to the project and third-party liabilities.

   •     Workmen’s Compensation (WC) Insurance — Provides compensation for workers in case of injury or death.

   •      Employer’s Liability Insurance — Protects against claims from employees due to workplace injuries.

   •      Public Liability Insurance — Covers third-party claims for injury or property damage.

   •      Professional Indemnity Insurance — Protects against claims arising from design errors or professional negligence.

   •      Plant and Machinery Insurance — Covers  equipment and machinery against damage or theft.

   •      Material in Transit Insurance — Covers loss or damage to materials while in transit.

   •      Fire and Allied Perils Insurance — Protects against fire, explosion, and related risks.

   •      Third-Party Liability Insurance — Covers legal liabilities to third parties for injuries or damages caused by engineering or construction activities.

   •      Environmental Liability Insurance — Covers liabilities arising from environmental damage or pollution

   
   
   
   
   
   

2. Other responsibilities to be negotiated with contractor

   2.  Responsibility for lodging claims related to above policies and arranging claim survey

   3.  Responsibility for timely payment of premium costs

   4.  Indemnification clauses that protect against loss

   5.  Responsibility for updating the sum insured, policy extension, and coordinating the recovery of insurance claims

   
   
   
   

   B) Communication and reportings ( 3 clauses)

   1.   Regular progress reporting requirements.

   ·      Submit weekly and monthly progress reports covering milestones, site activities, and potential delays.

   ·      Include visual documentation such as site photographs or video walk-throughs.

   2.   Communication protocols and designated points of contact.

   ·      Establish a single point of contact for each project discipline (e.g., construction, procurement, finance).

   ·      Set up regular coordination meetings (e.g., weekly/fortnightly ) with clear agendas and tracking of action items.

   3.   Documentation and record-keeping standards

   ·      Maintain centralized digital records of all project-related documents, approvals, and correspondence.

   ·      Implement version control to track changes in project plans, drawings, and contracts.

C) Temporary facilities and Utilities ( 5 clauses)

Provision and maintenance of temporary facilities (offices, restrooms, etc.) and costs thereof

1.   Responsibility for arranging Power from external sources or generating sets and power distribution to other site contractors and recovery rates and methodology for recovery 

2.   Responsibility for arranging  Fuel or and  wifi or and  water  from various sources and  distribution arrangements to  other project-site contractors and recovery rates and methodology for recovery

3.   Responsibility for providing scaffolding /material handling equipment to sub-contractors  or other site contractors and recovery rates and methodology for recovery

4.   Responsibility for providing labor hutments at the site and supply of electricity, drinking water, food, sanitation arrangements and costs thereof etc

5.   Responsibility for providing labor hutments at the site and supply of electricity, drinking water, food, sanitation arrangements and costs thereof etc

D) Performance Bank Guarantee (PBG-5 clauses )

1.  Requirements for Performance Bank guarantees

2.  Amount, Currency, Contents, and  Duration of PBG

3.  Conditions for enforcing Bank guarantees

4.  Names /locations of the issuing banks for PBG, particularly for overseas-based contractors and endorsement from local/corresponding bank in the state/city  where the project is located

5.  Advance notice for seeking extension & costs for  obtaining/extension of PBG

E) Statutory Clearances and Compliance (5 clauses))

1.  Responsibility for obtaining necessary licenses, permits, clearances and payments

2.  Compliance with applicable statutory regulation 

3.  Documentation of approvals and inspections

4.  Responsibility for dealing with site inspectors and responding to show cause notices

5.  Day to day maintaining statutory registers,  records or documentation

Final Thoughts

A well-structured SITC contract protects against financial losses, delays, and quality failures. Negotiating these 90 clauses ensures that costs are controlled, quality is maintained, deadlines are met, and compliance risks are minimized.

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