This document discusses different types of construction contracts:
- Lump sum contracts specify a single price for completing a project. They provide incentives for efficiency but carry high risks for contractors.
- Unit price contracts base payment on quantities of work completed. They allow for changes but the final cost is unknown.
- Cost plus contracts reimburse contractors for all costs plus a fee. They provide flexibility but lack incentives for cost control.
Contracts provide a legally-enforceable framework for guiding any and every type of business relationship, from employment agreements to orders for parts and supplies. While these agreements are key to guiding business relationships and ventures across all sectors, getting contracts right is especially important within construction, where the ability to complete a build on time, on budget and to code hinges upon all vendor arrangements going as expected. From the builder’s perspective, contracts are also important for preventing scope creep and to reducing the risk of cost overruns they may unexpectedly have to absorb.
Construction management contracts encompass the work and/or materials required for a building project. Typically, they will address:
1)Project/deliverable specifications
2)Labor and material requirements
3)Timelines for completion/delivery
4)Compensation formula and amounts
While construction management agreements will typically include the above, they can be structured differently, with numerous types of contracts that are designed to best meet the needs of all parties under all sorts of different scenarios. Familiarizing yourself with the types of contracts that are typically in play within building projects is an important first step to optimizing all contract-related processes within construction management.
Contracts provide a legally-enforceable framework for guiding any and every type of business relationship, from employment agreements to orders for parts and supplies. While these agreements are key to guiding business relationships and ventures across all sectors, getting contracts right is especially important within construction, where the ability to complete a build on time, on budget and to code hinges upon all vendor arrangements going as expected. From the builder’s perspective, contracts are also important for preventing scope creep and to reducing the risk of cost overruns they may unexpectedly have to absorb.
Construction management contracts encompass the work and/or materials required for a building project. Typically, they will address:
1)Project/deliverable specifications
2)Labor and material requirements
3)Timelines for completion/delivery
4)Compensation formula and amounts
While construction management agreements will typically include the above, they can be structured differently, with numerous types of contracts that are designed to best meet the needs of all parties under all sorts of different scenarios. Familiarizing yourself with the types of contracts that are typically in play within building projects is an important first step to optimizing all contract-related processes within construction management.
Presentation is trying to define the intent , content, methods and scope of arbitration and tendering and its implications for the architectural practice.
Construction Project Management is an important subject to learn in Civil Engineering.
Significance • As construction involves various activities starting from the design and planning to project completion and quality check, there is a exorbitant need for Management of construction. • Construction Industry plays a crucial role in the economy and development of a nation.
4. Objectives To complete the project in specified time and with allocated budget. To Plan and schedule the work and distribute between various departments. Deployment of personnel in Different tasks. To achieve High quality workmanship. Creating an organisation that works as a team. Using the limited available resources and producing maximum output. Providing safe and satisfactory working conditions for all personnel and workers.
5. Functions: Planning & Scheduling Organizing Staffing Directing Controlling & Co-ordinating
6. Stages of construction Briefing Designing Tendering Construction Commissioning
7. 1) Briefing Stage • This stage consists of framework required for the construction work to take a shape from the ideology of client and feasibility of Project which involves architects, engineers and project manager.
Objectives Developing Alternatives Feasible Solution ? Evaluation of Alternatives Report & Recommendation Technical and non technical Investigations
8. 2) Designing or planning Stage Prepare construction schedule Prepare final cost estimate Prepare Working Drawings and specificati ons Prepare scheme and detailed designs Soil investigations, Topographic investigation, material supply and market surveys etc Carry out Technical Investigations Final adoption of the most suitable summary Finalize Project Summary
Types of Contract in Construction ManagementShahin MB
Types of Contract in Construction Management
Lump Sum Contract
Cost plus Fixed fee
Cost plus bid fee contract
Guaranteed Maximum
Negotiated
Unit price Contract
Design build
turn key contract
A Lump Sum Contract is a legal contract where the contractor promises to complete the whole project at a pre-agreed price. Here the focus is on the completion of the whole project and not on the smaller tasks.
To know more about it, click on the link given below:
https://efinancemanagement.com/costing-terms/lump-sum-contract
Presentation is trying to define the intent , content, methods and scope of arbitration and tendering and its implications for the architectural practice.
Construction Project Management is an important subject to learn in Civil Engineering.
Significance • As construction involves various activities starting from the design and planning to project completion and quality check, there is a exorbitant need for Management of construction. • Construction Industry plays a crucial role in the economy and development of a nation.
4. Objectives To complete the project in specified time and with allocated budget. To Plan and schedule the work and distribute between various departments. Deployment of personnel in Different tasks. To achieve High quality workmanship. Creating an organisation that works as a team. Using the limited available resources and producing maximum output. Providing safe and satisfactory working conditions for all personnel and workers.
5. Functions: Planning & Scheduling Organizing Staffing Directing Controlling & Co-ordinating
6. Stages of construction Briefing Designing Tendering Construction Commissioning
7. 1) Briefing Stage • This stage consists of framework required for the construction work to take a shape from the ideology of client and feasibility of Project which involves architects, engineers and project manager.
Objectives Developing Alternatives Feasible Solution ? Evaluation of Alternatives Report & Recommendation Technical and non technical Investigations
8. 2) Designing or planning Stage Prepare construction schedule Prepare final cost estimate Prepare Working Drawings and specificati ons Prepare scheme and detailed designs Soil investigations, Topographic investigation, material supply and market surveys etc Carry out Technical Investigations Final adoption of the most suitable summary Finalize Project Summary
Types of Contract in Construction ManagementShahin MB
Types of Contract in Construction Management
Lump Sum Contract
Cost plus Fixed fee
Cost plus bid fee contract
Guaranteed Maximum
Negotiated
Unit price Contract
Design build
turn key contract
A Lump Sum Contract is a legal contract where the contractor promises to complete the whole project at a pre-agreed price. Here the focus is on the completion of the whole project and not on the smaller tasks.
To know more about it, click on the link given below:
https://efinancemanagement.com/costing-terms/lump-sum-contract
These five types of construction contracts are widely used across the world. Get to about the lump-sum contract, unit-rate contract, cost-plus contract, time & material contract, and target cost contract. All the contract types are explained with their respective example, pros and cons.
Tips for effective administration of a construction contract and for reducing the risk of delay and change orders. Interplay between the contractors, the consultant and an owner.
Courier management system project report.pdfKamal Acharya
It is now-a-days very important for the people to send or receive articles like imported furniture, electronic items, gifts, business goods and the like. People depend vastly on different transport systems which mostly use the manual way of receiving and delivering the articles. There is no way to track the articles till they are received and there is no way to let the customer know what happened in transit, once he booked some articles. In such a situation, we need a system which completely computerizes the cargo activities including time to time tracking of the articles sent. This need is fulfilled by Courier Management System software which is online software for the cargo management people that enables them to receive the goods from a source and send them to a required destination and track their status from time to time.
Overview of the fundamental roles in Hydropower generation and the components involved in wider Electrical Engineering.
This paper presents the design and construction of hydroelectric dams from the hydrologist’s survey of the valley before construction, all aspects and involved disciplines, fluid dynamics, structural engineering, generation and mains frequency regulation to the very transmission of power through the network in the United Kingdom.
Author: Robbie Edward Sayers
Collaborators and co editors: Charlie Sims and Connor Healey.
(C) 2024 Robbie E. Sayers
Quality defects in TMT Bars, Possible causes and Potential Solutions.PrashantGoswami42
Maintaining high-quality standards in the production of TMT bars is crucial for ensuring structural integrity in construction. Addressing common defects through careful monitoring, standardized processes, and advanced technology can significantly improve the quality of TMT bars. Continuous training and adherence to quality control measures will also play a pivotal role in minimizing these defects.
Forklift Classes Overview by Intella PartsIntella Parts
Discover the different forklift classes and their specific applications. Learn how to choose the right forklift for your needs to ensure safety, efficiency, and compliance in your operations.
For more technical information, visit our website https://intellaparts.com
Welcome to WIPAC Monthly the magazine brought to you by the LinkedIn Group Water Industry Process Automation & Control.
In this month's edition, along with this month's industry news to celebrate the 13 years since the group was created we have articles including
A case study of the used of Advanced Process Control at the Wastewater Treatment works at Lleida in Spain
A look back on an article on smart wastewater networks in order to see how the industry has measured up in the interim around the adoption of Digital Transformation in the Water Industry.
Saudi Arabia stands as a titan in the global energy landscape, renowned for its abundant oil and gas resources. It's the largest exporter of petroleum and holds some of the world's most significant reserves. Let's delve into the top 10 oil and gas projects shaping Saudi Arabia's energy future in 2024.
Sachpazis:Terzaghi Bearing Capacity Estimation in simple terms with Calculati...Dr.Costas Sachpazis
Terzaghi's soil bearing capacity theory, developed by Karl Terzaghi, is a fundamental principle in geotechnical engineering used to determine the bearing capacity of shallow foundations. This theory provides a method to calculate the ultimate bearing capacity of soil, which is the maximum load per unit area that the soil can support without undergoing shear failure. The Calculation HTML Code included.
CFD Simulation of By-pass Flow in a HRSG module by R&R Consult.pptxR&R Consult
CFD analysis is incredibly effective at solving mysteries and improving the performance of complex systems!
Here's a great example: At a large natural gas-fired power plant, where they use waste heat to generate steam and energy, they were puzzled that their boiler wasn't producing as much steam as expected.
R&R and Tetra Engineering Group Inc. were asked to solve the issue with reduced steam production.
An inspection had shown that a significant amount of hot flue gas was bypassing the boiler tubes, where the heat was supposed to be transferred.
R&R Consult conducted a CFD analysis, which revealed that 6.3% of the flue gas was bypassing the boiler tubes without transferring heat. The analysis also showed that the flue gas was instead being directed along the sides of the boiler and between the modules that were supposed to capture the heat. This was the cause of the reduced performance.
Based on our results, Tetra Engineering installed covering plates to reduce the bypass flow. This improved the boiler's performance and increased electricity production.
It is always satisfying when we can help solve complex challenges like this. Do your systems also need a check-up or optimization? Give us a call!
Work done in cooperation with James Malloy and David Moelling from Tetra Engineering.
More examples of our work https://www.r-r-consult.dk/en/cases-en/
Vaccine management system project report documentation..pdfKamal Acharya
The Division of Vaccine and Immunization is facing increasing difficulty monitoring vaccines and other commodities distribution once they have been distributed from the national stores. With the introduction of new vaccines, more challenges have been anticipated with this additions posing serious threat to the already over strained vaccine supply chain system in Kenya.
Vaccine management system project report documentation..pdf
Construction contract
1. Procurement Management and Contract Administration (COTM 4242): TYPES OF CONSTRUCTION CONTRACTS
Mada Walabu University Andualem Endris (M.Sc)
TYPES OF CONSTRUCTION CONTRACTS
Contract Definitions
A. From a Legal Point of View
Contract is a mutual agreement between two or more parties that
something shall be done, an agreement enforceable at law.
B. According to FIDIC
Contract means the General Conditions, the Supplementary Conditions,
the Specifications, the Drawings, the Bill of Quantities, the Tender, the
Letter of Acceptance, the Contract Agreement, and such further
documents as may be expressly incorporated in the Letter of Acceptance
or Contract Agreement.
C. According to Method of Payment
The agreement of how the owner will pay the contractor for work
performed such as a lump-sum or cost-plus payment.
TYPES OF CONSTRUCTION CONTRACTS
Two broad categories:
Price Given in Advance Contracts (Priced-based Contracts)
Cost Reimbursement Contracts (Cost-based Contracts)
Factors Influencing the Choice of the Type of Contract
The appropriateness for providing an adequate incentive for
efficient performance by the contractor
The ability to introduce changes
The allocation of risks
The start and completion date of the project
2. Procurement Management and Contract Administration (COTM 4242): TYPES OF CONSTRUCTION CONTRACTS
Mada Walabu University Andualem Endris (M.Sc)
1.Lump Sum Contact
Sometimes called Drawings and Specifications Contract
a) Main Aspects of Lump Sum Contract
1. The contractor agrees to perform a stipulated job of work in
exchange for a fixed sum of money. In other words a single
tendered price is given for the completion of a specified work to the
satisfaction of the client by a certain date.
2. Payment may be staged at intervals of time on the completion of
milestones.
3. Useful for construction works:
that can be accurately and completely described at the time of
bidding such as residential and building construction,
when limited variation is needed,
when level of risks is low and quantifiable, and
when the client does not wish to be involved in the management
of his project.
4. The contractor is responsible for preparing his B.O.Q. i.e.
determination of work items, description of work items, obtaining his
own quantity form drawings and specifications and taking the
responsibility for the accuracy of the estimated quantities.
5. The responsibility is on the contractor to include in his price
everything necessary for carrying out the work.
b) Advantages of Lump Sum Contract
1. The final price is known, by the owner, before the work commences.
2. The contractor has more incentive to reduce his cost to increase the
profit.
3. The contractor hopes to complete the job as quickly as possible, to
minimize overhead, to maximize profit and to move to the next Job.
3. Procurement Management and Contract Administration (COTM 4242): TYPES OF CONSTRUCTION CONTRACTS
Mada Walabu University Andualem Endris (M.Sc)
c) Disadvantages of Lump Sum Contract
1. A great deal of work should be done by the contractors prior to
preparing the estimate. It is wasteful of a skilled estimator’s time.
2. Changes in drawings and specifications can be very expensive and
source of trouble. In other words the contract has very limited
flexibility for design changes.
3. The contractor carries much of the risks. The tendered price may
include high risk contingency.
4. Competent contractors may decide not to bid to avoid a high-risk
lump sum contract.
2. Admeasurement Contract
Sometimes called Unit Price Contract
1. Includes Bill of Quantities Contract and Schedule of Rates Contract.
2. Payment is made (monthly) for quantities of work completed and
measured during the month. The client can introduce variations in the
work.
3. The contractor can claim additional payment for any changes in the
work content.
4. Tender price is usually increased by variations and claims.
a) Main Aspects of Unit Price Contract
1. Items of work of the contract are specified with estimated quantities in
the Bills of Quantities.
2. Estimated quantities are surveyed by Architect/Engineer.
3. Contractors enter unit prices against the estimated quantities of work.
4. The contract is based on estimated quantities of work items and unit
price for each of these work items.
5. Payment is made on the basis of units of work actually done and
measured in the field multiplied by the unit prices.
4. Procurement Management and Contract Administration (COTM 4242): TYPES OF CONSTRUCTION CONTRACTS
Mada Walabu University Andualem Endris (M.Sc)
6. Re-determination of unit prices when substantial quantity deviations
occur is stipulated in contract conditions.
7. Useful on projects where the nature of the work is well defined, but
the quantities of work cannot be accurately determined in advance of
construction. Suitable for highways, dams, airports…
b) Advantages of Unit Price Contract
1. Saving the heavy cost of preparing many bills of quantities by the
contractors.
2. Fair basis for competition.
3. In comparing with lump-sum contract,
Changes in contract documents can be made easily by the owner.
Lower risk for contractor.
c) Disadvantages of Unit Price Contract
The exact final price of the project is not known to the owner until the
completion of the project.
3. Cost Plus Contracts
Sometimes called Cost Reimbursement Contract
a. Main Aspects of Cost Plus (Cost Reimbursement Contract)
1. The contractor will be reimbursed for all actual costs plus an
agreed fee to cover his services (overhead and profit).
2. The contractor must make all his records and accounts available
for inspection by the client or by some agreed neutral third party.
3. The fee can be designated as:
A fixed percentage of the cost of the work.
A fixed fee.
A fixed fee with a guaranteed top price.
A fixed fee with bonus.
A fixed fee with an arrangement for sharing any cost saving.
5. Procurement Management and Contract Administration (COTM 4242): TYPES OF CONSTRUCTION CONTRACTS
Mada Walabu University Andualem Endris (M.Sc)
Suitable:
when the requirements of the client are vague,
when it is desirable for design to proceed concurrently with
construction
for emergency projects, repairs, maintenance work, and alterations.
for project with unknown technologies or major changes.
where the contractor possesses a special ability.
when the client wishes to be involved in contract management.
Confidential processes.
b. Advantages of Cost Plus Contract
1. Start construction without waiting for the whole set of drawings and
specifications.
2. More flexibility for the owner to make changes as work progresses.
3. Draw the contractor expertise during design.
c. Disadvantages of Cost Reimbursement Contract
1. It is difficult to predict the final cost and the distribution of it, which
may cause financial problems to the owner.
2. Contractor pays less attention to cost control.
3.1 Cost Plus Percentage of Cost Contract
a. Main Aspects of Cost plus Percentage of Cost
1. The contractor is reimbursed for all his costs with a fixed % age of
costs to cover his services.
2. Project/site overheads may be covered by the %age or computed as
one of the costs.
b. Advantages of Cost plus Percentage of Cost
1. Construction can start before design is completed.
6. Procurement Management and Contract Administration (COTM 4242): TYPES OF CONSTRUCTION CONTRACTS
Mada Walabu University Andualem Endris (M.Sc)
2. If the contractor is efficient in the utilization of resources then the
cost to the client should represent a fair price for the work
undertaken.
c. Disadvantages of Cost plus Percentage of Cost
1. The project total cost is completely unknown before the project
start.
2. No incentive for the contractor to be efficient in his use of labors,
materials or equipment.
3. Minimum efficiency maximizes the profit.
4. Owner must exercise tight cost control, which may be difficult
and/or costly.
3.2 Cost plus Fixed Fee Contract
a. Main Aspects of Cost plus Fixed Fee
1. The owner pays all costs of construction with a fixed sum of money.
The fee is fixed and does not fluctuate with the actual cost of the
project.
2. The work must be fairly well defined by the owner.
b. Advantages of Cost plus Fixed Fee
1. There is incentive for the contractor to complete the work as quickly
as possible since his fee remains constant.
c. Disadvantages of Cost plus Fixed Fee
1. Major variations create problems. The fee must be re-negotiated to
take account of such variations.
2. The speed of commencing the work is undermined since before a
fee can be agreed a fairly detailed description of work must be
made.
3.3 Cost Plus Fixed Fee Plus Profit Sharing Contract
7. Procurement Management and Contract Administration (COTM 4242): TYPES OF CONSTRUCTION CONTRACTS
Mada Walabu University Andualem Endris (M.Sc)
It is also Known as Guaranteed Maximum Price Contract (GMP)
a. Main Aspects of Cost Plus Fixed Fee Plus Profit Sharing
Contract
1. The contractor guarantees that he will construct the project in full
accordance with the drawings and specifications and that the price
to the owner will not exceed some total upset price.
2. If the price of the work exceeds the assured maximum, the
contractor pays for the excess.
3. Contracts are often competitively bid in a manner similar to that for
lump-sum contracts, but managed as cost plus.
4. The successful bidder is determined on the combined basis of his
quoted maximum price and fixed fee.
5. The contractor and owner agree to a target estimate of
construction.
6. Bonus or penalty arrangements are tied to this target figure.
7. The work must have a fairly definite nature. Drawings and
specifications must be sufficiently developed to enable a reasonably
accurate cost to be determined.
8. Cost target sharing of・ profits
b. Advantages of Cost Plus Fixed Fee Plus Profit Sharing
Contract
1. There is an incentive to carry out the work as quickly and as
economically as possible.
2. The client also stands to benefit through the contactor's
efficiency.
c. Disadvantages of Cost Plus Fixed Fee Plus Profit Sharing
Contract
1. Difficulties may arise in agreeing on a revised target cost if there are
major variations or cost inflation.
8. Procurement Management and Contract Administration (COTM 4242): TYPES OF CONSTRUCTION CONTRACTS
Mada Walabu University Andualem Endris (M.Sc)
2. A tight cost control must be exercised, which may be difficult and/or
costly.