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Qs 415

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107 views31 pages

Qs 415

Is a lecture note on qs 415

Uploaded by

Ali Abubakar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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QS 415

 The construction contract explained

 Detailed Study of Contract Document

 Detailed Study of Preliminaries

 Principles of Specification Writing


Process of contract formation (validity of a
contract).
 Types of construction contracts.
Parties to the contract; duties and rights
 Consultants in contract; roles and interrelationship
Main contractor/subcontractor relationship
Distinction between nominated & domestic
subcontractor and their relationship with main
contractor and the client.
 Articles of Agreement
 BOQ
 Technical Specification
 Drawings
 Schedule of works
 Employers requirements
 Schedule of works
 Preliminaries
 Features of specification writing
 Language for specification writing
 Practical exercise on writing specification for:
cement, sand, blocks, timber, steel,
reinforcement, concrete, rendering and tiling.
The Contract
Under the general law of contract, when a party
makes an offer to provide goods and/or services
for some certain consideration and the party to
whom the offer is made accepts it, then, provided
it does not involve any illegal act, a contract
which is enforceable at law exist. This is no less
the case in construction world than any other
sphere of business or industry.
A contract is define as an agreement that is
enforceable by law.

Validity of a contract
For any contract to be valid, it must contain
various essential requirement which includes:
 There has to be an offer to carry out the work
and acceptance by the client so that a contract
of agreement can exist binding the contractor
to carry out the work and the client pays.
 the parties to the contract must be
acceptable in law by having the capacity to
contract.
 The parties must genuinely accept the terms
of the contract.
 There has to be an intention to establish
legality and the contract must be achievable
and legal.
Construction contracts can be classified either
based on how a contractor’s work is being
valued and paid or based on the key parties
responsibilities in a contract. There are three
types of contracts when a construction contract
is classified based on how a contractor’s work
is been valued and paid: lump sum contract;
Schedule of rates contract and Prime cost
contract.
 A contract under which a principal (customer
or owner) agrees to pay a contractor a
specified amount for completing work
without requiring a cost breakdown.
A lump sum contract is normally used in the
construction industry to reduce design and
contract administration costs. It is called a
Lump Sum because the contractor is required to
submit a total and global price instead of
bidding on individual items.
A lump sum contract is the most recognized
agreement form on simple and small projects,
for example, projects with a well-defined
scope or construction projects where the risk
of different site conditions is minimal.

This type of contracts are subdivided into


three: based on bills of firm quantities; bills of
approximate quantities and base on drawings
and specification.
The essential characteristics are that both the
quantities and the unit rates in the bills form
part of the contract and that virtual completion
of the design precedes the sign of the contract.
The quantities entered in the bills are binding
on the client, while the rates entered in the
bills are binding on the contractor.
This method is largely similar to the preceding
one except that the quantities given in the bill
are approximate only and are subject to later
adjustment. The essential characteristics are:

i- Only the unit rate form part of the contract

ii- The signing of the contract and the


beginning of work on site may proceed before
the design is completed.
The bill of quantities is normally prepared for
the particular project and descriptions of works
are as detailed as in the bill of firm quantities,
but the time otherwise required for detailed
measurement of quantities is saved, the
quantities given being estimates of likely
requirements. Sometimes the bill re-uses the
quantities which were prepared for an earlier
project of a sufficiently similar king and size.
This method closely resemble that described
above, the difference being that no bills of
quantities are supplied to the tenderers who
have to prepare their own quantities from the
drawings provided. This procedure is intended
to be used for relatively small works and for
sub-contract works.
Although it is not unknown for quite large
contracts to be tendered on this basis. The
essential characteristics are: that tenderers are
supplied only with complete working drawings
and a full specification and that virtual
completion of design must precede the signing
of the contract.
A supplier being contracted under a lump sum
agreement will be responsible for the proper
job execution and will provide its own means
and methods to complete the work.

This type of contract usually is developed by


estimating labour costs, material costs, and
adding a specific amount that will cover
contractor’s overhead and profit margin.
A lump sum contract is a great contract
agreement to be used if the requested work
is well-defined and construction drawings are
completed. The lump sum agreement will
reduce owner risk, and the contractor has
greater control over profit expectations.
 Itis also a preferred choice when stable soil
conditions, complete pre-construction
studies and assessments are completed and
the contractor has analysed those documents.

 The stipulated sum contract might contain,


when agreed-upon parties, certain unit prices
for items with indefinite quantities and
allowance to cover any unexpected condition.

 The time to award this type of contract is also


longer; however, it will minimize change
orders during construction.
 Low risk to owner.

 'Fixed' construction cost.

 Contractor will try to complete the project


faster.

 Accepted widely as a contracting method.


 Bidding analysis and selection process is
relatively easily.

 Contractor will maximize its production and


performance.

 Minimize change orders.

 Owner supervision is reduced when compared


to Time and Material Contract.
 It presents higher risk to contractor.

 Changes are difficult to quantify.


 The Owner might reject change order
requests.

 The project needs to be designed completely


before the commencement of activities.
 Theconstruction progress could take longer
than other contracting alternatives.

 Contractor will select its own means and


methods.

 Highercontract prices that could cover


unforeseen conditions
Lump sum contracts are a great tool for
smaller jobs and quite simple projects.
However, lump sum contracts could eventually
produce large dispute and claims that will arise
from contract documents. The most common
arguing factors are:
1. Unbalance Bids : Some projects might
require to produce an application for payment
using unit quantities and unit prices. Many
contractors will produce an unbalanced bid by
rising unit prices on items to be completed early
in the project, such as mobilization, insurances
and general conditions, and lowering unit prices
on items needed in later stages.
2. Change Orders: If the owner produces or
receives a change order proposal from the
contractor, the price quotation could be
possibly disputed. The Owner might appeal
that the requested change was already covered
under contract provisions. It is important to
prepare specific contract clauses specifying
how change orders are going to be managed
and to what extent the contractor could claim
delay damages.
3. Scope and Design Changes: A contractor
may suggest design changes based on their
experience. Contract provisions should be clear
on how those changes will be addressed and
how those costs will be divided or who will be
responsible for the economic impact of the
proposed changes.
4. Early Completion: Lump sum contracts
might include an early completion
compensation for the contractor. Early
completion might produce higher savings for
the project owner; however, those clauses
might be explicit in the construction contract.
THANK YOU

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