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FIDIC conditions of contract
Published in J.C. Edison, Infrastructure Development and Construction Management, 2020
A construction contract is an agreement between an employer and a contractor to construct a built facility within the prevailing legal system of the country. The employer grants access and possession of the site and makes arrangements for payments and the contractor promises to complete the works as per the contract. The engineer acts as the impartial representative of the employer and performs certain determination/certifier functions under the contract. The FIDIC Red Book is a contract form which provides conditions of contract for construction works where the design is carried out by the employer. Different forms of FIDIC contracts reflect different procurement approaches. The multilateral development bank harmonised edition of FIDIC conditions of contract was elucidated in this chapter.
Construction contracts
Published in Len Holm, 101 Case Studies in Construction Management, 2018
A construction contract is a legal document that describes the rights and responsibilities of the contracting parties (for this discussion, particularly the owner and the general contractor). The terms and conditions of their relationship are defined solely within the contract documents. These documents should be read and completely understood by the contractor before deciding to pursue a project. As shown in several of the case studies in this chapter, understanding contractual agreements is something that is not always adequately handled. The contract is also the basis for determining a project budget and schedule. To manage a project successfully, the project manager must understand the organization of the contract documents and understand the contractual requirements for his or her project. Knowledge of the terms and conditions and workings of the contract is essential if a project manager expects to satisfy his or her contractual requirements.
The Life of a Project
Published in Anghel Patrascu, Construction Cost Engineering Handbook, 1988
The construction contract should be a complete document. It must clearly specify the scope of work, base cost, how the extra work will be handled, schedule, how scheduled delays will be negotiated, the amount of supervision involved, quality of work, terms of payment, and what constitutes satisfactorily completed work. The construction contract must be specific about what reports will be required by the owner or the engineering and construction firm, when they will be prepared and their frequency, how construction status will be reviewed by the client, and the client’s involvement in case of trouble. It is highly recommended that the contract specify what final documents and analyses are required at the completion of the project. If the client wants to build a data bank of construction costs, only the contractor who is doing the work can provide these costs.
Managing construction risk with weather derivatives
Published in The Engineering Economist, 2021
David Islip, Jason Z. Wei, Roy H. Kwon
Broadly speaking, engineering and construction contracts fall into two categories: fixed price (or lump sum) contracts and cost reimbursement contracts (Hughes, Champion, & Murdoch, 2015). In a pure cost reimbursement contract, the owner pays the contractor the actual cost incurred during the execution of the work plus a markup and, as a result, the owner bears all risks including weather-related ones. In a pure fixed price or lump sum contract, the contractor is paid a pre-determined amount that is supposed to cover both the actual cost and the estimated markup. Clearly, the contractor bears all the risks in a lump sum contract. In reality though, most of the construction contracts are hybrids of the two extreme versions in which risks are allocated between both the owner and the contractor. Hendrickson (1989) and Surahyo (2018) describe several specific contract types which we delineate below.
Technological, organisational and environmental determinants of smart contracts adoption: UK construction sector viewpoint
Published in Construction Management and Economics, 2021
Sulafa Badi, Edward Ochieng, Mohamed Nasaj, Maria Papadaki
According to Zaghloul and Hartman (2003), construction contracts are “the written agreements signed by the contracting parties (mainly an owner and a contractor), which bind them, defining relationships and obligations” (p. 419). In any given construction project, and to achieve the client’s goals, the choice of contract type should ensure the alignment between the client’s objectives and the motivations of the contractor through adequate risk allocation (Kozek and Hebberd 1989). There are several types of contract in use in the construction sector, and the most suited contract type depends on the completeness of the information available to bidders at the tender stage and the risk appetite of the client (Gordon 1994, Antoniou and Aretoulis 2018). A study by Zaghloul and Hartman (2003) involving 300 respondents from across the construction industry supply chain found that more than 74% of the contracts employed in construction are prepared contracts written by one of the contracting parties, often the owner, and not negotiated.