Contract Administration Process

 The main processes involved in the implementation of a construction project from stage after development plans have been drawn up and approved, and the necessary fund have been obtained from the Client to ensure completion and settlement of payments for its construction are as follows:

ƒ Preparation of project brief

 Land acquisition

ƒ Site surveying and site and soil investigation

 Preparation of preliminary design and site layout plans

ƒ Detail architecture and engineering drawing;

ƒ Preparation of preliminary estimates

ƒ  Preparation of the tender documents

ƒ  Invitation and receipt of tenders

ƒ  Evaluation and acceptance of tenders

ƒ  Preparation and signing of contract documents

ƒ  Supervision and monitoring the progress of work

ƒ  Extension of time for completion;

ƒ  Imposition of liquidated and ascertained damages

ƒ  Determination of employment of contractors; (when necessary)

ƒ  Completion and handing over of work completed and making good of defects

ƒ  Nomination of subcontractor and suppliers

ƒ  Administration of payments and

ƒ  Preparation of valuation of variation works and the final accounts

Lump sum contracts

A lump sum price may be called for, or a series of lump sums. This is best suited to easily defined, relatively simple constructions, involving little below-ground work. However, some quite large above-ground constructions are paid for by lump sum. Sometimes a separate section of the bill for pricing allows for the foundation work of a building to be paid for ‘on measure’.

In some kinds of civil engineering work the lump sum payment method can pose serious risks upon a contractor, causing him to add a substantial sum to his tender. This is particularly so for design-and-build or ‘turn-key’ projects where the contractor has to undertake detailed design as well as construction. The employer has to pay these additional sums whether or not any risks materialize.

A disadvantage is that an employer may have to pay a high price for any alteration or addition he wants to the project, because the contractor is only committed to undertaking a fixed amount of work for the fixed payment. Payments under lump sum contracts are usually made in instalments as set out in the contract according to stipulated stages of completion, or linked to a programme or activity schedule.

Types of construction contracts

Types of construction contracts/The Nature of Construction Contracts

A contract is an understanding made between two or more persons, by which rights are acquired on the one side to acts or forbearances on the other. To make an agreement which results in a contract, there must be an offer and acceptance which leads to a binding force of obligation.

Lump sum contract

A lump sum contract is an agreement pursuant to which one party consents to pay another party a set dollar amount for completing the work or providing the goods described in the agreement. Typically, lump sum contracts do not require contractors to provide a detailed breakdown of costs. Rather, the payment of the total contract price is linked to the contractor completing all of the work specified in the contract.

Cost-Plus

Under this arrangement the contractor is reimbursed for the actual cost of labor and materials, plus charges a fee (typically an agreed-upon lump or percentage of the total costs) for overhead and profit.  This arrangement seldom begins with a blank slate regarding specifications and costs. Rather, the consumer and contractor will create a list of specifications and an estimated budget to match to those specifications.  Although the contractor under this arrangement will have to keep copious records of its costs, most residential consumers in a cost-plus arrangement suffer from kid-in-a-candy storeitis and overspend. One way to prevent breaking the budget is to set a guaranteed maximum price.  However, even a maximum price will not alleviate problems.

Unit Price Contract

In a unit price contract, the risk of inaccurate estimation of uncertain quantities for some key tasks has been removed from the contractor. However, some contractors may submit an “unbalanced bid” when it discovers large discrepancies between its estimates and the owner’s estimates of these quantities. Depending on the confidence of the contractor on its own estimates and its propensity on risk, a contractor can slightly raise the unit prices on the underestimated tasks while lowering the unit prices on other tasks. If the contractor is correct in its assessment, it can increase its profit substantially since the payment is made on the actual quantities of tasks; and if the reverse is true, it can lose on this basis. Furthermore, the owner may disqualify a contractor if the bid appears to be heavily unbalanced. To the extent that an underestimate or overestimate is caused by changes in the quantities of work, neither error will effect the contractor’s profit beyond the markup in the unit prices.

Target Estimate Contract

This is another form of contract which specifies a penalty or reward to a contractor, depending on whether the actual cost is greater than or less than the contractor’s estimated direct job cost. Usually, the percentages of savings or overrun to be shared by the owner and the contractor are predetermined and the project duration is specified in the contract. Bonuses or penalties may be stipulated for different project completion dates.

Guaranteed Maximum Cost Contract

When the project scope is well defined, an owner may choose to ask the contractor to take all the risks, both in terms of actual project cost and project time. Any work change orders from the owner must be extremely minor if at all, since performance specifications are provided to the owner at the outset of construction. The owner and the contractor agree to a project cost guaranteed by the contractor as maximum. There may be or may not be additional provisions to share any savings if any in the contract. This type of contract is particularly suitable for turnkey operation.

The contract documents

The contract documents in order of importance are follows

Form of contract

This is the principal document and will often be a printed standard form, such as one of the variants of the JCT Form.

The Articles of Agreement

The Conditions

Total contract sum

Condition of contracts

The condition of contract is represent the legally binding agreement between the parties and cover such important as expected completion date of the work, methods and timing of payments, access to the works etc.

Specification

The specification may describe the method of working and quality required in the works, to assist the contractor in preparing the tender. Specification is used during.

Tendering, to help the estimator to price the work that is required to be carried out

Construction by the designer in order to determine the requirements of the contract, legally technically and financially, and by the building contractor to determine the work to be carried out on site.

Bill of Quantities

When tendering, the bill of quantities is sent out as part of the package of contract documents for the contractor to price. The  enters a unit price or rate against each item of work, the quantities are then multiplied by the rate and the price for the item of work established all the item prices are then added up to give the contract price. Provision may be made for variation and additional work within the bill of quantities by including provisional sums.

Contract drawings

The drawings should be indicate the location, scope and design complexity of the works and show graphically the full extent of what is required to be constructed.

What is contract?

What is contract?
The contract is an agreement between the owner and the contractor as to how much the owner will pay to house that contractor to build the project.
Introduction
An engineering contract is a formal agreement enforceable at low between parties. There by each accept certain responsibilities and receive certain benefits.
Failure in any way to carry out the responsibility so undertaken usually involves some form of section and it is therefore necessary `that all people concern in executive a contract are fully aware of just the exact responsibilities of the proxies to the contract are and the precise implementation and failure to full fill then
The liabilities for branch of contract con be heavy easily exceeding the valve of the contract itself if proper safeguards are not taken those responsible for implementing a contract must there fore alias be on guard

Essential elements of a contract
In addition to the agreement erodent by offer and acceptant these are a number of other essential elemi tents of a contract the main requirements are
1. An in tent ion by the party to create a legal relationship bet wean them.
2. A true consent of the party
3. Legal capacity of the parties tee enter a contract
4. Legality of the a objectives of the contract
5. Valuable consideration passing between parties
6. Pigment of requisite of stamp dry.

Construction Contract & Tender procedure

1. The quantity surveyor and his functions.

1. Understands the procedure a doped for the award of contracts in the construction in destroy.

2. Construction procurement.

3. Tendering procedure

4.Tender evaluation

5. Constitution contracts

6. Execution of the contract

7. Prime cost and provisional sums.

8. Variations and fluctuate tins.

9. Cast control of a project

10. ICTAD condition of contract.