The base date shall set the deadline from which the conditions under which the tender was drawn up shall be considered to be known to the contractor and shall therefore be duly reflected in their price. If certain conditions change before the contract is implemented, the contract can be adjusted to reflect this. Engineering contracts deal with four specific topics of an agreement between an engineer and the company for which he will work on a project. 4. Costs plus order percentage â Here, the works are awarded on the basis of the percentage of actual construction costs. The actual costs are handed over to the owner, where the owner pays the price with a specific price, it is appropriate when the work needs to be done quickly or the costs of the project are difficult to predict as a lump sum. Again, the owner pays based on the contractor`s performance and therefore the contractor tends to work more carefully and do their job well. In addition, the work can be presented to the owner before the completion of drawings and specifications. Speed is also the advantage here.
As a result, lump sum contracts are best suited for small projects with predictable workloads. When it comes to cost-plus contracts, most of the risks are placed on the owner. This is because the contractor is paid for all costs incurred during the project and all unforeseen expenses come out of the owner`s pocket. For this reason, cost-plus contracts are best suited for projects that require a lot of creative flexibility. The completion of a section refers to a provision in a construction contract that allows for different completion dates for different stages of the work. This is common for larger projects that are completed in stages, allowing the customer to take possession of the finished parts while construction continues on to others.  This contract is used when the risk is to be transferred to the builder and the owner wants to avoid change orders for unspecified work. However, a contractor must also disclose certain percentages of costs associated with bearing this risk. These costs are hidden in the fixed price. With a lump sum contract, it`s harder to get credit for unfinished work, so keep that in mind when analyzing your options. 7. Turnkey contract â This is the one under which the contractor is responsible for both the planning and construction of a factory.
The contractor shall make the work available ready for use at the agreed price and on a fixed date. It falls into the category of special contracts. Time and material contracts are generally preferred if the scope of the project is unclear or has not been defined. The owner and contractor must set an agreed hourly or daily rate, including any additional costs that may arise in the construction process. Sufficient time should be allowed to prepare the employer`s requirements (the employer usually appoints consultants to facilitate this), as well as time for the contractor to prepare his offer and offer price. It is essential that the proposal meets all the employer`s requirements before entering into a contract. Sometimes another type of construction contract may also include a GMP provision. For example, a cost-plus contract could include a clause that limits the total cost to a guaranteed maximum price. GMP (Guaranteed Maximum Price) contracts set an upper limit on the contract price. With this type of construction contract, the owner will not exceed the price of the contract.
All material or labor costs in excess of this price must be borne by the contractor. If a clause is not reduced to the written form (if the contract, whether written or oral, is silent on the matter), the law may provide for a delay clause in the event of a problem. By reducing these conditions to writing, the parties can control how this issue is handled and avoid imposing a standard clause on them that is not favourable to their position. A subcontract is a contract concluded primarily between a contractor or prime contractor and a subcontractor. It defines the limits of the specialized work that must be done for the construction project.  For a complex project, there may be several contracts at the same time and there usually are. The most obvious and common is the contract between the owner (or developer) and the general contractor (or builder). In addition, if a design professional is involved, there will be a contract between that party and the owner (or, as is increasingly common, between the design professional and the builder in the case of design-build contracts). If the builder hires subcontractors instead of doing everything himself (the former is much more common), there will be subcontracts between the builder and its subcontractors (called “first-level subcontractors”), and there are often additional contracts between first-level subcontractors and their second-level subcontractors, and therefore at all levels. When using industrial forms, it is important to understand that the different forms of different contracts interact and work together. For example, the EAR form for an owner-architect contract requires the use of the EAR form for the owner-contractor contract.
So, if you`re using some sort of standard owner-contractor contract, you need to make sure that a standard contract from the same source is also used for the owner-architect contract. .