SOP Library

SOP NO: ID-CT01

Mission: (none)

Title: Infrastructure Project development

Date Approved/Issued: 07/24/85

Date Effective: 08/01/85

Digest:

To facilitate evalution and approval of proposed projects, effectively monitor progress of

implementation and to have an efficient control in the system of payment relative to NFA
Infrastructure Project Development.

This shall cover all activities involved in Infrastructure Project Development i.e. from the
project proposal phase until payment of the contract. Also included are the guidelines in the
repair of facilities and instructures which are capital in nature.
 1. Special Order No. 46 dated 18 November 1981 on : Reorganization of Project
Development Coordinating Committee (PDCC);

2. COA Circulars No. 80-101-B dated April 1980 and No. 80-26-F dated 25 February
1980;

3. P.D. 1594 implementing rules and regulations governing infrastructure contracts and its
amendments;

4. Inter-Directorate Memo of Assitant Administrator for finance and Administration re;

Attestation to Accomplish Reports for Payment of Construxtion Projects;

5. Memo #130 dated 22 March 1983 and SOP #023003 dated 03 June 1983 (Post-
Harvest and Related Facility Management) ; and

6. Memo #110 dated 25 May 1983 on Guidelines in the Inspection of NFA Purchse,
Infrastructure Construction and Food Processing Facility Installation.

A. Project Proposal/Request

A.1 For construction of Regional/Provincial Office buildings and administrative

facilities.

A.1.1 Request for the construction of Regional/Provincial Office buildings shall

emanate from the Regional Director/Provincial Manager. For provinces,
request shall be coursed through the Regional director for submission to the
PDCC and endorsed to the Sub-Committee on Manpower and General
Services.

A.1.2 Request for the construction of Office buildings shall automatically inculde
the installation of electrical, water abd drainge systems, site development
works such as road development inside compound and construction of
perimeter fence.

A.1.3 Request for the construction of other administrative facilities such as

guardhouse, staffhouse, canteen, tennis court,public toilet, etc. with
corresponding electrical, water and drainage systems shall follow the same
 procedure of endorsement, i.e., thru the Regional Office to be endorsed to
PDCC for evalution. However, INF may request for additional facilities for
construction when deemed necessary but with concurrence of the Regional
Director/Provincial Manager of the concerned province.

A.2 For construction of new grains and non-grains storage facilities or conversion of
installation/erection/maintenance of other post-harvest facilites, such as power
plants, ricemill, driers, etc.

A.2.1 Request shall emanate from the Regional Director based on

recommendaation/endorsement by the Provincial Manager/OIC and shall be
coursed through the PDCC.

B. Project Evalution and Approval

B.1 Upon receipt of project request, PDCC shall immediately endorse the same to the
subcommittee concerned for evalution of operation and technical viability and for
prioritization.

B.2 The PDCC sub-committee shall recommend approval/disapproval to the Mother

Committee not later than fifteen (15) days after receipt of the project request.

B.3 Initially approved projects shall be endorsed to INFfor preliminary engineering

study to determine the best scheme and designs, plans, specification and
estimates of the project.

B.4 The project shall be endorsed to the Budget Committee for the necessary funding.
PDCC shall make representation to the committee for budget deliberation.

B.5 Alll construction projects with funds appropriation shall be subject to the approval
of the Administrator/Deputy Administrator.

C. Project Implementation

C.1 Upon approval of the Administrator/Deputy Administrator of project request, INF

shall undertaken the necessary preparation for its implementation on coordination
with the requesting office.

C.2 Construction projects shall be undertaken either by Administration or by 3rd party.

If by 3rd party, a competitive bidding shall have to be conducted following SOP on
Conduct of Public Bidding of NFA Infrastructure Projects.

C.3 The project shall, with the exceptions specified in the contract documents, be
carried out in accordance with the ruling standards and codes of practice
prevailing in the Republic of the Philippines.
 Depending on the origin of manufacture, materials complying with correspondingly
well-known standards will be accepted for use if deemed to be equal quality as the
specified standards.

C.4 The construction shall in no case be started without the formal 'Work
Commencement Order' to be issued by INF to the contractor. This shall be issued
within 5 days after execution of contract. The actual work/construction should start
not later than 15 days after receipt of order. (See Exhibit A).

C.5 Copies of project plans and specifications and other pertinent documents
regardiing the construction project shall be furnished by INF to the concerned
Provincial Manager/OIC.

C.6 Upon commencement of the actual work/construction, the contractor shall submit
a perfomance bond and an 'all risk' insurance policy in favor of NFA. This shall be
required proir to collection of any amount due the contractor. The amount of policy
shall be correspondingly increased as the work progresses based on the amount
collectible for NFA. At the completion of the project, policy shall be equivalent to
the contract cost of the project. Such policy shall be suported with a statement
under oath of his premium payments together with the Official Receipts.

C.7 A project inspector from INF shall be assigned to the project to supervise the
contractor's compliance with approved plans and specification. He shall be under
the adminitrative supervision of the RD/PM/OIC for the duration of his travel.

The project inspector shall be authorized to:

1.) Inpect materials delivered abd intended to be used in the construction of the
project and reject the same if they do not conform with the specifications.
However, the designated Property Inspector of the Regional/Provincial Office
shall likewise conduct inspection of the materials whenever deemed
necessary.

2.) Order removal/replacement of defective or unauthorized work;

3.) Recommenn suspension/discharge of any employee of the contractor, if in his

opinion, such employee is careless, incompetent and obstructing the progress
of the work or performs act contracly to instructions;

4.) Issue suspension order/s in cases provided forin the contract such as bad
weahter condition which might affect the safety of workers and quality of their
work.

4.1 A copy of the suspension order shall immediately be furnished the

respective Unit Auditors who shall then as certain the validity of the basis
of the issuance of the Suspension Order. If upon verification, the Auditor
 is convinced that no valid groud/s exists for such suspension, he should
immediately bring the matter to the attention of the RD/PM/OIC
concerned andd request the lifting of the suspension order. Should there
be any disagreement between them, the case should be reffered to the
Corparate Auditor for appropriate action.

C.8 Documentation and Reporting

1.) A weekly Project Accomplishment Report (Exhibit B) shall be prepared by the

Project Inspector for submission to INF. This shall include the percentage
accomplishment per work description and other relevant data. A narrative
report relative to all his official acts shall be attached. Both reporst shall be
duly signed by the Head of Office and the COA Audithor.

2.) A Weahter Chart (Exhibit C) at the construction site shall also be maintaned
by the Project Inspector and shall be noted monthly by the RD/PM/OIC.

C.9 The Project Inspector shall supervise the project for a maximum period of three
(3) moths or up to completion of the project whichever is shorter unless sooner
recalled or extended by the INF Director.

The incumbent inspector shall be notified of his/her recall or extension at least ten
(10) days prior to the effectively date.

In case there is need to recall/replace the incumbent, the incoming Project

Inspector shall have an effectivity of assignment two (2) days before the
termination of assignment of the incumbent.

The two (2) overlapping days shall be alloted for the turnover of responsibilities
and briefing on the details of the project. The incumbent shall prepare a terminal
report based on his last day of assignment which shall be duly signed by his
reliever and the RD/PM for submission to INF.

C.10 Upon completion of the project, a written notice shall be served by the contractor
to the Agency of the readiness of the project for inspection and acceptance. If
acceptable, a final accomplishment report and a Certification of Acceptance (See
Exhibit D) shall be prepared and certified correct by the INF Project Inspector,
concurred and acceptancd by the RD/PM/OIC and noted by the INF Director. A
memorandum to DAB certifying 100% completion of the project and its
acceptability shall be prepared by the INF Division Chief and approved and
recommended for paymentby the INf Director. This shall form part of ther
supporting documents for collection.

C.11 After acceptance of the project, the contractor shall post a Guarantee Bond issued
by the same Surety Company which issued the performance bond unless said
bonding company has been suspended. The Guarantee Boind shall be equivalent
 to 10% of the contract price which shall be effective for a period of one (1) year
from the date of acceptance of the work to answer for maintenance, repair or
replacement caused by defective workmanship or poor quality materials. Such
bodnd shall be released after one (1) year from issuance of a Certificate of
Acceptance which shall be certified correct by the INF Project INspector, inspected
by the Internal Audit Directorate Inspector, concurred by the RD/PM/OIC and
approved by the INF Director.

C.12 Change Order/Extra Work

A change order/extra work may be recommended by the INF Director after careful
avalution of its necessity/signifinance. No change order or additional work shall be
issued without prior approval from the AO/ODAP/ODAL unless otherwise such
order or work shall be necessary to carry out the real intention of the project and
the absence of such shall be detrimental to the whole project.

Additional worl may be negotiated with the current contractor if he has proven
satisfactory performance and the cost of such wprk does not exceed 25% of the
original contrac price. Otherwise, a "seeled bidding" shall be conducted.

The cost of additional work, if negotiated, shall be based on the unit cost of the
winning bid proposal. A supplementary agreement shall be prepared.

A change order/additional work shall be affected by a written order with the

appropriate plans and specification from the Director of INF.

C.13 Extension of Contract Time

Should an additional work.change order be necessary or other special

circurmstances occur so as to fairly entitle the contractor to an extension pf
contract time, the Agency shall grant such but only when the affected activities
fall within the critical path of the PERT/CPM network and only for the equivalent
period of justified delay as confirmed by the Priject Inspector, provided that the
written consent of the Surety Company who issued the Performance Bond is
attached to the request for extension to be submitted to the Agency for
consideration and that validity of the Performance Bond is correspondingly
extended.

Extension of contract time shall be granted the contractor due to any the following:
1.) unfavorble weather conditions which shall affect safety and qaulity of work;
2.) non-availability of supplies or materials to be furnished by him and which he
has no control;
3.) when the reason given to support the request for extension was not
consireded in the determination of the original contract time, and
4.) other causes for which the Agency is directly responsible such as revisions of
plans and specification.
D. Payment

1. Advance payment

Within fiftenn (15) days from the date the contractor commenced work on the
projects, the Agency may allow an advance payment equal to the average operating
expenses of the contractor fro two (2) months or fifteen percent (15%) of the contract
price, whichever is lesser, against an irrevocable standly letter of Credit posted by
contractor at a bank acceptanble to the Agency.

2. Inpection by IAD

2.1 First payments and subsequent payments (Excluding the last payments) for all
claims pertaining to developmental projects, such as construction and
improvements of Regional/Provincial Offices, warehouse, other post harvest
facility, etc. shall be subject to inspection of the Internal Audithor/Property
Inspection of the Internal Auditor/Property Inspection of IAD or the
Plant/Regional Engineer subject to the following:

Project Cost Authorized Inspector

Greater than or Initiall to -Technical Audit

equal to P1.2M final Division, LAD
Inspection

LEss than P1.2M a. Initial )

INspection )
b. Inspection ) NFA Plant Engineer/
of on-going ) Regional Engineer
project )
c. Final -Technical Audit
inspection Division, IAD

2.2 Last payments of all claims pertaining to developmental projects mentioned

above, regardless of the amount of cliams, shall be subject to inpsection by IAD
Inspector/Internal Auditor.

3. Progess Payment shall be based on 12.5%, 25%, 37.5%, 50%, 62%, 75% 87.5%
and 100% accomplishedfor easy monitoring of payments.

If any advance payment of 15%, contractor shall submit an affidavit stating payment
of all obligations due for labor, material, equipment rental and taxes, before any
partial paymewnt of more than 75% of the total contract price shall be made and
another affidavit upon collection of 100% accomplishment.
4. 10% Retention

Progess payments are subject to retention of ten percent (10%) referred to as

"retention Money". Such retention shall be based on the amount due to contractor
prior to any deduction and shall be retained from every progess payment until fifty
percent (50%) of the value of the works are completed. If after 50% completion, the
work is satisfactority done and on schedule, no additional retention shall be made,
otherwise, the ten percent (10%) shall still be imposed. The total retention money
shall be due for release uopn acceptance of the works.

However, after payment to the contractor of at least 50% of the total contract price ,
the agency shall be, at the request of the contractor, release the retention money
provided the contractor ppost an irrevocable standby letter of Credit in favor NFA to
answer and substitute for the purpose for which the ten percent (10%) retention is
intended.

5. Collection and Requirements for Payment

The following are reqwuirements for each collection:

1. Advance Payment

1.1 Statement of estimated two (2) months operating expenses provided by the
Contractor.

1.2 Irrevocable stand by Letter of Credit posted by contractor in favor of NFA.

2. First Progess Payment

With 15% Advance Payment

2.1 Accomplishment must be 12.5% and above.

Wtih 15% Advance Payment

2.2 Accomplishment must be at least 12.5%

2.3 Supporting papers

a. Performance Bond and Receipt

b. All Risk INsurance Policy and Receipt
c. Letter of Award
d. Work Commencement Order
e. Abstract of Bids
f. Contract - 2 copies
g. Justification(for negotiated contract)
 h. Request for Collection
i. Accomplishment Report
j. INF Director Memo of Approval and Recoomendation for payment
k. Certified Copy of Building, Sanitary, Zoning and Major's Permit
l. Inspection Report by IAD/Regional Engineer or Plant Engineer
m. Cost estimate

3. Subsequent Progess Payments

Up to 50% Accomplishments

a. Request for Collection

b. Accomplishment Report
c. INF Director's Memo of Approval and Recommendation for Payment
d. Inspection Report by IAD for Projects amounting to P1.2 M or more. or by
Regional/Plant Engineer for Project amounting to P1.2M orr more, or by
Regional/Plant Engineer for Projects below P1.2M

More than 50% Accomplishment

a. Request for Collection

b. Accomplishment Report
c. INF Director's Memo of Approval and Recommendation for Payment
d. Inspection Report by IAD for Projects amounting to P1.2 M or more. or by
Regional/Plant Engineer for Project amounting to P1.2M orr more, or by
Regional/Plant Engineer for Projects below P1.2M

4. Last Progess Payment

4.1 Accomplishement Papers

4.2 Supporting Papers

a. Request for Collection

b. Accomplishment Report with Construction Accomplishment Graph
c. Affidavit of Contractor
d. Certificate of Acceptance
e. INF Directors Memo certifying 100% completion and acceptability with his
aproval amd recommendation for payment
f. Guarantee Bond
g. Inspection Report by IAD

5. Release of 10% Retention

Before Completion
 5.1 Accomplishment not below 50%\
5.2 Supproting Papers

a. Request for Release

b. Accomplishment Report
c. Irrevocable Stand-by Letter of Credit
d. INF Directors Memo certifying percentage of completion, satisfactory
performance with approval and recommendation for release
e. Inspection Report by IAD

Upon completion (may be requested with last porgess payment)

5.3 Accomplishment must be 100%

5.4 Supporting papers

a. Request for Release

b. Accomplishment Report
c. Certificate of Acceptance
d. INF Director's Memo certifying 100% completion satisfactory
performance with approval and recommendation for release
e. Inspection Report by IAD
f. Certificate of no post construction/installation defects

6. Revocation of standby Letter of Credit and Release of Performance Bond (may

be requested with the last progress Payment)

6.1 Accomplishment must be 100%

6.2 Supporting papers

a. Request for Approval of Revocation of standby Letter of Credit and

Release of Performance Bond
b. Certificate of Acceptance
c. INF Director's Memo certifying 100% completion, satisfactory
performance with approval and recommendation for revocation and
release.

7. Release of Guarantee Bond

7.1 One year has elapsed from date of accpetance of project

7.2 Supporting papers

a. Request for Release of Guarantee Bond

b. Certificate of no-past construction defects
 Aside from the requirements mentioned above, other supplementary requirements
may be required when circumtances necessitates their submission. The contractor
shall be immediately notified of such additional requirement so as not delay any
collection claims.

8. INF shall keep an orderly file of on-going and completed construction projects for
ready reference and shall also maintain a record of project [ayments using the
Statement of Project Payment and 10% Retention (see EXhibit E) to effectively
monitor collections made by contractors.

E. Repairs

1. Field Offices

1.1 Cost of repairs shall be determined by the Regional Engineer or a representative

from INF.

1.2 If the estimated cost of the repair, i.e. labor and materials, is estimated at less
than P50,000, it shall be undertaken by the Regional/Provincial Office without INF
supervision, except when such repair requires technical supervision.

1.3 If the cost is estimated at P50,000 or more, INF supervision, shall, be required.

1.4 For project by administration, the INF Director shall issue authority to the
RD/PM/OIC to undertake the repair by administration. However, if the office is not
capable of undertaking such repair by adminitration, the RD/PM/OIC may enter
into a straight contract (labor and materials) afetr conducting the proper "Sealed
Canvass" produce.

The cost of repair shall be charged as capital expenditure off the

Regional/Provincial Office.

2. Central Office

- All request for repair in the Central Office shall be endorsed to GSD for evalurion and
implementation. Such repair shall generally be undertaken by adminitration.

- If the repair cannot be undertaken by administration, a sealed bidding shall be

conducted by the Bids and Awards Committee in coordination with INF and GSD,

A. Project Request/Proposals
 1. Provincial Manager PM-36

a. Prepares request indicating justification on the need for the project. Forwards request to
the Regional Director for review and endorsement to PDCC.

2. P D C C

a.) Recieves the proposal and forwards to the concerned sub-committee as follows for
prioritization and evaluation on the operational and technical viability.

I. To Post Harvest Facility and Equipment Sub-Committee- if the proposal involves the
construction/coversion of grians and non-grains.

II. To General Services and Manpower Development Sub-Committee- if the proposal

involves the construction of Regional/Provincial Offices and other administrastive
facilities.

B. Project Evaluation and Approval

1. PDCC Sub-Committee

a.) Evaluates porposal based on standard guidelines/criteria/factors previously established.

b.) Recommends approval/disapproval of the project request to the Mother Committee

within ten (10) days after receipt thereof. Likewise, recommends the priority of the
evaluated porposal.

2. PDCC

a.) Reviews reccommendation and discusses with the sub-committee.

Approves/disapproves proposal and informs requesting office.

b.) Endores apporved proposal to INF for the preliminary engineering study to establish the
details of the project such as layout, design, etc.

c.) Makes representation to the budget committee for budget deliveration.

d.) Notifies requesting office of the apporval for implementation of the project. Endores to
INF for implementation.

3. I N F

a.) Coordinate with the concerned Provincial Manager/Regional Director. Determines the
details of the project and undetakes actual survey on site if necessary.
 b.) Prepares different schemes of implementation of the project together wuth the designs,
plans, and specification.

c.) Prepares pproject cost estimates based on above plans and determines the best
scheme applicable to the agency.

d.) Forwards plan and cost estimate to AA for Infrastructure and Develpoment.

4. AAID

a.) Recommends apporval/disapproval of project plan and cost estimate and returns to
PDCC for budget consideratrion. Cost estimates shall technically be called the
'Approved Agency Estimate (AAE)'.

5. Budget Committee

a.) Evaluates financial aspect of project proposal and recommends approval/disapproval of

the project to the Minister/Deputy Adminitrator (per Specs of Authority).

6.) Minister/Deputy Administrator

a.) Approved/Disapproves the implementation of the project based on the committees'

recommedations' returns to PDCC.

The approved cost estimates shall technically be called 'Approved Agency Estimates
(AAE)' which shall be the basis for bidding purpose.

C. Project Implementation

I - By Contract (Refer to SOP on Public Biddings for NFA Infrastructure Projects)

1. Regional Director/Provincial Manager RD-13/PM-37

a.) Verifies 'Work Commencement Odred' presented by Contractor. Initials on same

signifyings concurrence on the start of the project.

b.) Notifies INF on actual date of work commencement.

2. I N F

a.) Assigns Project Engineer/Inspector to supervise the peoject.

b.) Prepares copies of approved plans and specifications, contract, work program and other
documents for submission to RD/PM.
 c.) Acts on proposed revisions/deviations to approved plans as endorsed by the Project
Engineer/Inspector and the RD/PM.

d.) In case additional work is necessary, request the Bids and Awards Committee to
negotiate with the current contractor or conduct a new bidding based on guidelines.

e.) Upon completion of project, inform IAD of such for the final inspection and reporting to
be noted by RD/PM.

f.) After acceptance of the prohect, requires contracotr to post a Guarantee Bond.

3. Project Engineer/Inspector

a.) Upon receipt of Assignment Order issued by the INF Director, secures seperate copy of
approved documents for reference. Proceed to project site.

b.) Reports to RD/PM/OIC; presents assignment order and endorses management coopy of
approved documents.

c.) Reports to INF of date of arrival and initial project condition thru wire.

d.) Coordinates with the Contractor for the proper implementation of the project.

e.) Prepares regular Accomplishment Reports/documentaton as required with the

signatures of proper authorities in the field office.

f.) If revision/deviation on approved plans/specification is inevitable, informs INF, Central

Office on the proposed revisions; awaits approval prior to implementation.

g.) Maintains an updates PERT/CPM at the site and oordinates with the contractor for
proper compliance.

h.) Upon completion of the project, inspects finished project for possible defects. Reviews
original plan and specification, revision/additional works, if any, and contract provision.
Informs INF on the completion of project.

i.) Prepares final accomplishment report and Certificate of Acceptance concurred by the
RD/PM.

D. Payment to Contractor

1. I N F

a.) Prepares and/or request from contractor all necessary supporting documents for claims
as enumarated in guidelines.
 b.) Secures necessary signatures on documents and vouchers; forward to DAB-CPD.

2. Technical Auditor, IAD

a.) Conducts inspection of on-going/finished projects.

b.) Prepares inspection report based on actual work accomplishment project.

3. DAB-CPD

a.) Determines veracity of claims and checks documents; processes voucher and certifies
availabilty of funds. Forward to approving authority for signature (per guidelines on
specification of authority).

4. Approving Authority

a.) Approve voucher and forwards to Treasury for a check preparation and payment.

5. DTFM

a.) Prepares check and secures signature of proper authorities.

b.) Releases check to contractor and request for Official Receipt.

c.) Forward paid voucher to COA for post audit.

II- By-Administrator

1. INF

a.) Work out the release of funds per approved Budget Allocation.

b.) Appoints Project Engineer/Inspector to supervise the project.

2, Project Engineer/Inspector

a.) Upon receipt of Assignment Order,proceed to project site and brings proper documents.
Reports to the Regional Director/Provincial Manager.

b.) Coordinates with Supply Officer on the purchase of constraction materials, lease of
equipment following SOP on Purchasing.

c.) Coordinates with Administrative Officer/Assistant on the hiring of workers such as

laborers, carpenters, mason, etc.
d.) Upon completion of project or upon termination of travel, secures from Accounting total
amount expended for the project and includes in reporting.

(Other duties and responsibilities same as in I-By Contract)