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5 Different types of construction contracts and their suitability

1. Lump sum Contract: 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 with this kind of contract the engineer and/or contractor agrees to do a described andspecified project for a fixed price.<br>2. Unit Price Contract: Items of work of the contract are specified with estimated quantities in the Bills of Quantities. Estimated quantities are surveyed by Architect/Engineer. Contractors enter unit prices against the estimated quantities of work.The contract is based on estimated quantities of work items and unit price for each of these work items. Payment is made on the basis of units of work actually done and measured in the field multiplied by the unit prices.<br>

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5 Different types of construction contracts and their suitability

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  1. 5 Different types of construction contracts and their suitability

  2. Lump sum Contract 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 with this kind of contract the engineer and/or contractor agrees to do a described andspecified project for a fixed price.

  3. Unit Price Contract Items of work of the contract are specified with estimated quantities in the Bills of Quantities. Estimated quantities are surveyed by Architect/Engineer. Contractors enter unit prices against the estimated quantities of work.The contract is based on estimated quantities of work items and unit price for each of these work items. Payment is made on the basis of units of work actually done and measured in the field multiplied by the unit prices.

  4. Schedules of Rates Contract A Schedule of the work items without quantities (or inaccurate quantities; possibly with upper and lower probable limits) is prepared by the owner and /or A/E to be rated by the contractor.The descriptions of items and the units of measurement are similar to those used in a normal B.O.Q., but no quantities are given. It is common for separate rates to be quoted for labor, plant, and materials. Used for repair and maintenance works or under conditions of urgency.

  5. Cost Plus Percentage Contract 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.The work must be fairly well defined by the owner.

  6. Cost Plus Fee Contract In this type of contract, client selects a firm who will tender all in service from inception to completion stage of the project.Such firm shall be responsible for taking brief from client, selecting a site, developing a sketch scheme, pricing it and carrying out construction. At the end they handover the completed building and settle the final account. In this type of contract the client undertakes to pay a lump sum amount for all the above services.

  7. Contact UsLocation: 10 Ripplevale Cir, Carramar WA 6031, AustraliaWebsite: https://measuremanage.com.au/Email Address:info@measuremanage.com.auToll Free Number : 0498 202 445

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