Lecture 2 - Types of Contracts in Construction Industry Flashcards
Traditionally, the _____ commissions a design.
employer
The _____ then is required to build in accordance with the design prepared by the employer.
contractor
Under such a contract, the contractor’s responsibility is only to _______
construct in accordance with the design.
If there is a failure of the structure eventually, as long as the contractor has constructed in accordance with the design, then liability falls on the______
designer.
This method is well-proven and long-established in the industry.
The Traditional Contract
COMPENSATION TO CONTRACTOR
a. ) Lump – Sum Contracts
b. ) Measure and Value Contracts
c. ) Cost Plus Contracts
the price for the entire scope of works are fixed.
lump sum contract
Lump sum contracts may come with ______, in which case the lump sum represents the total set out in the _____
Bills of Quantities
Alternatively, the _____ may be based on drawings only. In that case, the contractor has to estimate the quantities involved in order to quote a _____.
lump sum
Usually, the price of a lump sum contract cannot be varied due to any fluctuations of costs, currency, etc. unless there is a ____________
valid variation order
Lump sum contracts are good for employers,________
where the scope of work can be reasonably ascertained up-front.
A ________ would determine the rates for works to be carried out, or for supplies.
measure and value contract
This would usually be set out either in an approximate BQ or in a schedule of prices/rates.
measure and value contract
Final amount to be paid would depend on the actual quantity of works carried out or supplies made.
measure and value contract
measure and value contract are good for ___________
contractors, who will be remunerated based on the actual quantum of work carried out.
In a ______ , the contractor receives reimbursement of his actual cost plus a top-up to cover his profit.
cost plus contract
Cost plus contracts are good for:
Employers, if they can ensure the costs are fair.
- Contractors, especially in an uncertain environment with fluctuating costs and currencies.
__________ is one where the contractor undertakes both design work as well as the work of construction for the contract.
design and build contract
design and build contractis advantageous for
employers who get a complete design, full scope of works and stipulated price from the outset.
A variant of the design and build contract is the_______
turnkey contract.
In a ______, the contractor does not only carry out design and construct obligations.
turnkey contract.
( turnkey contract.) The contractor is also responsible for
- Financing
- Approvals
- Procurement
- Fitting out
- Intellectual property issues (transfer of technology).
It is also becoming increasingly common for parties to enter into _______instead of building contracts.
MANAGEMENT CONTRACTS
In a _______, the contracted manager’s role is to ensure the implementation of the contract is carried out effectively.
management contract
