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Contract Specifications

The overhead costs include the service costs, if any, that the employer has written in the specifications under the heading ‘services to be provided to the employer’, and these costs are included in the prices of all work items.

Recently, I have heard in the news that the minister has travelled from one place to another in a private company's plane, and they criticise the minister mercilessly because he did so on the basis of the company's contract with the state. 
Is this situation ethical? Is it in accordance with the law? What kind of concessions did that private company receive from state officials in return for this service?
Almost especially in most of the news channels close to the opposition, this issue is brought to the agenda and the incident is scrutinised at length.
***
I have not been able to follow the agenda for a while as I have been back to nature and busy with the soil in my own world, in the dacha. Therefore, when I heard about these discussions, I really laughed at the humour of this issue being on the agenda.
Yes, if you did not know until today, let me tell you that there are such special conditions in the tender specifications. 
While preparing the price for the tender, we, the interlocutors of the subject, take these special conditions into account in the prices.
Taking into account means that such costs are included in the tender prices. 
Is this right or not, this is actually a matter of discussion.
As a person who has sat on all sides of the table, let me keep my personal opinion to myself, but logically, since the contractors are the main organisations in terms of carrying out the works on the construction site, they provide such services more easily and under more favourable conditions. This is the nature of construction works. 
In other words, from this point of view, for example, it may be considered reasonable for the contractor to establish an office for the employer in the construction site mobilisation, or to provide the employer with office furniture, computers, telephones, to prepare the mobilisation of the control organisation required during the construction of such works and to provide some services to the employer during the control phase of the works.
In fact, the provision of the vehicles needed by the employer by the contractor may be much more affordable than the employer making all these costs himself.
If there are contract conditions, all these costs are included in the contractor's prices.
In some contracts, a separate price is determined for these works, but in many contracts, these costs are expected to be fed into the general price of the work by the contractor.
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In order to better understand how the contractor does this, I think we should first clarify the methodology used in the preparation of prices in tenders.
Let me try to explain this issue a little bit.
Normally, the works to be done are priced as work items listed under certain divisions. The quantities of each work to be done are determined by measuring from the prepared projects and the work items are removed from the projects one by one. 
Of course, this is valid if there is a drawn project and these drawings are compatible with the works to be done on site. 
Sometimes tenders are made without drawing any project, they tell the contractor to both prepare the project and do the work. 
In some projects, there are even employers who tender for the work by saying that we do not have any money, brother, you find the money for the work.
If you ask how the price is not determined in such tenders, let me say that experience is important in such tenders. If the contractor has done similar works before, he knows what kind of expenses he will have in such a job, what kind of work items there are in such a job and how much the amount of work is more or less. He prepares his price according to this past experience. 
In some works, if there is time, the contractor makes a preliminary project of the work and determines the prices according to this project.
In such tenders, the engineering solutions and material choices of the contractor are also effective in determining the appropriate price.
I exclude the prices determined other than these from the subject. What I am talking about are normal tender conditions. There are also so-called tenders where the prices are determined at the table between the contractors, but it would not be correct to call such tenders a tender, naturally.
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Anyway, I continue the article by assuming that under normal conditions, we determine the price for a project that has been sufficiently pre-inspected on site, the project has been prepared in advance according to the current site conditions and all kinds of work items and work quantities are known from the beginning.
When the work items and quantities of work are determined, the material costs to be used for those work items are calculated separately with the loss shares, the labour costs are calculated separately according to the labour times we call man-hours according to the experience of the company and a share we call overhead is added to these costs. Finally, taxes and a reasonable profit percentage are added to the price and the offer price is found. 
Here is the part we call overheads.
Under normal conditions, every company finds the material and labour costs more or less the same. Well, since the profit rate and taxes will be at the same level, we can say that the lower the overhead costs required during the construction of the work, the lower the tender bid price you will give. 
What are the overheads?
Here, whatever you can think of that concerns all works in general, all of them are overheads. 
From the crane that provides general service to the construction site, the salaries of the engineer staff carrying out all the works of the construction site, stationery costs at the construction site, telephones, computers, office furniture, all kinds of expenses can be included in this expense item. 
If you have existing equipment, your overheads will be less. If you have to buy a temporary transformer or a generator for the construction site, your costs will be high. 
Apart from these, water costs, worker dormitories, construction site offices, dining hall, sometimes kitchen, warehouse, construction site temporary roads, safety measures, all these general costs are considered as overheads.
Even tea and coffee costs for construction sites are overheads. 
In one of our construction sites, when you asked the employer's representative whether you drink tea or coffee, the employer's representative said bring coffee, we pay for it anyway. 
So the employer also knows that all these costs are included in the prices from the beginning.
All these costs are either as initial costs if they are made from the beginning, or if they are monthly costs, they are calculated and collected month by month, and after the total price is revealed, these costs are distributed to all work items whose material and labour costs are determined from the beginning with the ratio of these costs.
In these overhead costs, if any, the service costs written by the employer under the title of ‘services to be provided to the employer’ in the specifications are also included and these costs are fed into the prices of all work items.
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In the light of all this information, let's come to the critical question!
Can the employer write in the specifications that he will provide an aeroplane for the minister to come to the construction site when necessary?
In the tender specifications I have seen so far, I have never seen such a service requested.
Moreover, if the aircraft provided is not used for a job related to the construction site, I do not know that at all.
Normally, employer-specific services written in the specifications are services required during the execution of the construction site. 
For example, if it is a large construction site, the contractor will naturally have to take the employer's representative by vehicle to the place where the work is carried out on site in order to control the works on site. For example, in a road construction site, the employer's representative or the control organisation may request such a service from the contractor.
When the contractor performs this service with the vehicles that he has already purchased for the execution of the construction site, he does not incur any extra expense other than the cost of special petrol for the employer in terms of costs.
The same applies if the contractor establishes an office for the employer's representative or control organisation while establishing offices for himself. 
Either the cost will be lower because one of the existing offices in the contractor's possession is established, or if a new office is purchased, the need will be met with a lower cost since the negotiations are made collectively. Sometimes we were also renting offices, for example, and sometimes the cost of renting can be more favourable than buying.
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In short, it is normal for employers to include such conditions in contracts to some extent.
However, as I said, I think that obtaining some privileges personally through such a clause, or providing aircraft transport services to state cadres, etc. cannot be a condition included in any contract. 
I hereby condemn all state cadres, including ministers, who take shelter behind such a rhetoric while they have the opportunity within the scope of austerity measures and outsource their transport to contractors. In my opinion, this situation is the most obvious indicator of corruption.
You may say what can I achieve by condemning.
Does anyone give up this kind of behaviour because I condemn it?
I don't know about that, but I wrote this article in such detail so that we would know what to condemn and for what.
Those who criticise the issue on the screens criticise without knowing the details of the issue and as I said at the beginning, the criticisms are a bit funny.
Criticisms need to be made with the right information.
I guess I will say that if there are enough voices on this issue, maybe they will be ashamed and they will not do it again, but there is also a saying that the fish stinks from the head, what are we saying to whom!
***
I decided to go to Dacha for a while and take care of nature for a while, the internet facilities in Dacha are not the same as in the city, unfortunately, the internet services on mobile phones work badly enough here, that is, in Russia. 
While the internet infrastructure in the city can be done especially with fibreoptic connection, I have to use mobile internet in the dacha, and although the location of the dacha is good for mobile phone connection, it is a problematic place in terms of internet connection for some reason. I guess they thought that as long as people can talk on the phone, they don't need internet connection.
Therefore, I could not follow what was going on during this process, but even I could not keep silent about the minister's citing the clause in the contract as a justification for using a private company's plane for his transport.
So I decided to continue my articles on this subject, which I have been taking a break for a while.
***
What should I say, do they say such a comb to such a head, or should we say something else about this issue, you can decide for yourself. I hope that one day we will become a modern country and such things will not be on the agenda. 
Until that day comes, I guess we will have to put up with these politicians for a while longer.
I should say I feel ashamed.
Love and respect to everyone from Moscow

Araştırmacı Yazar Deniz BURSALIOĞLU
Author Deniz BURSALIOĞLU
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  • 03.06.2024
  • Time : 4 min
  • 899 Read

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