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Departmental System v. Contract.
5. At this stage, unless the point has already been considered, it is usually necessary to decide whether the work shall be executed by contract or on what is known as the "departmental" system. A discussion of the relative advantages of the two systems would be beyond the scope of this memorandum, but briefly it may be stated that where the magnitude and character of the work and the locality in which it lies are such as would be likely to attract contractors of good standing, and where it admits of being designed and estimated in full detail beforehand, the contract system may present advantages. Where, on the other hand, from the nature of the scheme or pressure of time the design cannot be completed in detail beforehand; or where for whatever reasons it is likely to be much modified during execution; or where, as in town drainage, the convenience of local bodies or of the inhabitants has to be studied so that a contractor could not be given freedom to proceed as best suits him; or where, on account of climate, or the difficulties incidental to newly opened countries, risks have to be taken which cannot be estimated with precision, then the preference would usually be for departmental system.
6. By the departmental system is meant in effect that the Government becomes its own contractor, taking upon itself the risks inseparable from the undertaking but avoiding the payment of the profit which a contractor would demand to cover these risks. In practice, the success of the system depends on the Government being able to entrust the control of the work to an officer of its own, possessing the qualifications and experience of the Chief Agent of a large contractor, and to vest in that officer the same large measure of discretion as such a contractor gives to his agent.
7. The work having been sanctioned and the system of construction...
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