Lecture 10

Question 1

which contract type with which delivery method

Answer 1

Any contract type ca be used with any deliverably method , it depends on the project and situation
i can do also combinations of contracts

Question 2

Construction is a project driven industry

Answer 2

big dimension is the contractual nature

Question 3

The one who the most contract on the project is the contractor

Answer 3

true

I have contract with client and several contracts with subcontractors and suppliers

Question 4

i can impose on my subcontractors back to back contracts

Answer 4

I apply same terms and conditions by the owner regarding schedule payments, like in order to get paid u submit me a request i review and when approved i will pay u when clients do .
Meaning mirror the contract between me as a contractor and the client with that between me and the subcontractor

Question 5

Contract

Answer 5

Agreement between two or more entities to do something in return for a consideration

Question 6

purpose of contract

Answer 6

.the job is done for exchange
.there is penalty legallhy if u dont keep ur part of the contract
.contract can be verbal

Question 7

Mostly all contracts are written also in large projects they are standardized

Answer 7

true
like fidic contracts
provide international standards
definitions
contract engineer 
......
In USA there are AIA contracts
Everything is defined in contracts

Question 8

we use standard contracts so we dont do everything again from start

Answer 8

also we can modify the contract

Question 9

Contracting process in construction is very unique

Answer 9

The setup present in the contract can nott be created again even if i have the same entities , i will have different subcontractors , different regulations….

Question 10

In construction u buy the product i.e. project in bits and pieces

Answer 10

1st u buy concept then design then the bid then the tasks completed

Question 11

U have general condition for the project

Answer 11

duties of entities , mechanism of payment; they apply over all project

Question 12

Supplementary conditions

Answer 12

like liquidated damages; should u dont deliver on time , you will pay a penalty
Owners use LDs (liquedated damages to cut the price of additional work)

Question 13

The most common type of contract in construction is

Answer 13

competitive bidding

Question 14

Another way which is not used a lotis cost +fee

Answer 14

true

Question 15

we also have unit price which is used also

Answer 15

true

Question 16

In the invitation for bidding i may have specific requirements like expertise , CVs of engineers…, they may ask other people they know if u are claim conscious contractors
gaurantee to handle financially the project

Answer 16

true

Question 17

claim conscious contractor

Answer 17

will review the project , identify the problems but dont talk about, then he will bid low, then when problems arisse during construction he will claim more
He doesnt raise the flag
He will bid perposely low and he will make more money due to variation order because of unidentified problems

Question 18

owners can prequalify the contractors

Answer 18

true

Question 19

How lump sum is made by contractors

Answer 19

he checks the BOQ and put expenses plus profits
He will just give the final number to the client.
Client can ask them to break it down like how much excavation, concrte, finishing

Question 20

We have direct costs

Answer 20

like materials and worjkers

Question 21

indirect

Answer 21

like engineers , crane

Question 22

lump sum gives the client a piece of mind about the cost

possibility to fix the cost

Answer 22

true

Question 23

Disadvantages

Answer 23

u may be paying a lot because the risk is high on the contractor
ALso as a client u are not flexible to change i lose leverage of bidding

Question 24

the secoond most used type is unit price

Answer 24

here u do the same as u did in the lump sum but u give them a chart of how much each item will cost like steel conncrete everything
units prices
It take out the risk of quantity fluctuation

Question 25

In unit price u have economy of scale also

Answer 25

like if the contractor do more jobs then client will tell him that is more work , u need to charge me little more than stated and vice versa

Question 26

Most contracts will have a lead of negotation if quantitits differ by 10 %

Answer 26

Both will raise the flag

Question 27

Advantages of unit price

Answer 27

more flexibility
risk for quantity variation will be reduced
if i do have fluctuation in quantities like excavation it will be beneficial

Question 28

Disadvantage there is no fixed price

Answer 28

true

Question 29

Disadvantage ( Bid unbalance)also i my price higher of units for early works so i can push the curve the left

Answer 29

true
clients may give advanced payments to decrease this behavior in return they get a gaurantee for that because they become cash exposed

Question 30

Cost plus fee type of contract is a fully reimbursable type of contract

Answer 30

keep alll the bills , i will pay them in addition to a fee

Question 31

Cost plus fee it is risk free

Answer 31

also it is lucrative for the contractor if it is a percentage for the cost so contractor will start trying to raise the cost for more fee

Question 32

clients can do a fixed fee like u will get 10 percent of 1 million

Answer 32

ur fee is a lump sum

Question 33

Also client can place a maximum price plus a fee after which the client no more pays

Answer 33

hybrid

cost plus fee to a certain point then it will get to be lump sum

Question 34

Also u may have incentives

Answer 34

if u end less a target u will split the saving
the same if above
share pain and gain

Question 35

cost plus fee

Answer 35

when u have a lot of uncertainties and it is a fast track also fuulyy transpareny

Question 36

disadvantage

Answer 36

no fixed budget

u need army of controllers on contractor