Difference Between Trade, Business and Profession

Trade; People who perform a particular kind of skilled work, The skilled practice of a practical
occupation

Business: The activity of providing goods and services involving financial and commercial and industrial
aspects with a rightful concern or responsibility,

Following are the main difference between trade, business and profession.

1. Minimum qualification
→ No qualification is required to start a business. Some skill is required for Trade.
→ Technical or academic qualification is needed to join a profession.

2. Capital 
→ An adequate amount of capital is required to run the business efficiently.
→ Real capital is the competency and specialized knowledge of the profession, as in a trade.

3. Objective 
→ The main objective of the business is to earn profits, to gain adequate wages for a Trade
→ Service first, profit second is the main approach of the profession.

4. Risk
→Due to profit motive, loss can also occur. There is a pronounced element of risk in business.
→ In profession and trade there is risk of not getting paid after giving eservice, but this risk is limited.

5. Secrecy
→ in the business transactions, no secrecy is necessary.
→ A professional must maintain the secrecy of dealings with his clients.

6. Code of Conduct
→ There is no specific code of conduct for the business.
→ There is a code of conduct for every profession for regulating their dealings.

7. Specialization
→ A businessman need not to have a specialized knowledge for starting a business
→ A professional must have a specialized knowledge in the profession which he wants to join.

8. Advertisement
→ Generally, the goods are advertised in business to increase sales.
→ Advertisement is prohibited in all the professions according to their code of conduct.

9. Transferability
→ One can easily transfer his interest in business to others like partner/s or son
→ Profession involves the specialized knowledge which cannot be transferred to any other person.
Distinguish or Difference between 1. Business 2. Industry 3. Commerce 4. Trade 5. Profession
Business :-
We may define the term business in the following words :
" As an institution organized by person or group of persons to produce or distribute goods or services
within incentive of earning profit through the satisfaction of human wants. The element of risk is also
involved in it."

Following are the main characteristics of a business :

1. Every business deals in goods and services.
2. The profit motive in the business is essential.
3. Element of risk is also involved in business.
4. In a business there should be a series of deal.
5. People should do the business for money. Free consumption of goods is not included in business.

2. Industry :-
Industry is a branch of a business. Industry is concerned with the production of goods and preparation of
goods.
All those activities which produce the goods, or convert the raw material into finished goods or
intermediate goods are included in industry. To produce agricultural goods and mining is also included in
industry. Anyhow the term industry refers to that pan of business activity which is concerned with the
extraction ,production or preparation of products. Following are the main kinds of industry.
1. Primary industry :- It may refers to agriculture and forestry.
2. Extractive industry :- It includes mining and fishing.
3. Manufacturing industry :- It includes the changing of raw material into a more useful form.
4. Constructive industry :- The construction of buildings, dams and roads includes in this industry.

Commerce :-
Commerce includes all those activities which are helpful in transferring goods from the place of production
to the consumer. For example purchases, sale, transportation's, banking, insurance, storage and
advertisement are the activities which come within the scope of commerce. Manufactured goods do not
reach directly from the producer to the consumer. For example wholesaler purchases the goods from
producer and uses the transportation to transfer these to his store. He also hires the services of bank and
insurance company. Then he sells the goods to retailer. A consumer purchases the goods from retailer .
So there are many obstacles in the way of producer an consumer.
Mr. James Stephen has rightly stated that ”Commerce includes those activities which remove the
hindrances of time, person and places in the exchange of goods."

Trade :-
Trade is an important part of commerce. All those activities are included in the trade which are helpful for
the exchange of goods between the producer and consumer. The exchange of goods can be direct or
indirect. Those factors which removes the obstacles in the exchange of goods are included in the scope
of trade. Trade can be carried out inside and outside the country. Within the country trade has two kinds.
Whole sale retail :- Trade with the foreign countries is either in the form of exports or in the form of
imports.

Profession :-
A vocation which a person adopts after getting specialized training. The professional man provides the
services of specialized nature to the people. Most professionals adopt a particular profession for the profit
motive but there may also be a dimension of selfless service in case of some individuals. This kind of
service is not possible in business or trade. Profession implies control over things that others want to
achieve in ways they cannot do those things for themselves - as a doctor, accountant, lawyer, architect,
engineer etc. Therefore a necessary trust relationship has to exist between a professional and the client,
which further implies the need for a canon of ethics.
 The Nature of Architectural Profession
• An architectural business may provide a variety of services to their clients. These services
generally include consultation, design, and supervision of design of commercial, governmental,
and residential structures or buildings. The plans, specifications, and other related documents
that are produced in the design phase are called construction documents.

• People need places in which to live, work, play, learn, worship, meet, govern, shop, and eat.
Architects are responsible for designing these places, whether they are private or public;
indoors or out; rooms, buildings, or complexes.

• Architects are licensed professionals trained in the art and science of building design who
develop the concepts for structures and turn those concepts into images and plans.

• Architects create the overall look of buildings and other structures. Buildings also must be
functional, safe, and economical and must suit the needs of the people who use them.
Architects consider all the factors holistically when they design buildings and other structures.

• Architects may be involved in all phases of a construction project, from the initial discussion
with the client through the final delivery of the completed structure. Architect’s duties require
specific skills - designing, engineering, managing, supervising, and communicating with clients
and builders. Architects spend a great deal of time explaining their ideas to clients, construction
contractors, and others.

• The architect and client discuss the objectives, requirements, and budget of a project. In some
cases, architects provide various pre-design services: conducting feasibility and environmental
impact studies, selecting a site, preparing cost analysis and land-use studies, or specifying the
requirements the design must meet. For example, they may determine space requirements by
researching the numbers and types of potential users of a building. The architect then prepares
drawings and a report presenting ideas for the client to review.

• After discussing and agreeing on the initial proposal, architects develop final construction plans
that show the building's appearance and details for its construction. Accompanying these plans
are drawings of the structural system; heating, ventilation and air conditioning systems
(HVAC); electrical systems; communications systems; plumbing; and, possibly, site and
landscape plans. The plans also specify the building materials and, in some cases, the interior
furnishings. In developing designs, architects follow building codes, zoning laws, fire
regulations, and other ordinances, such as those requiring easy access by people who are
disabled. Computer-aided design and drafting (CADD) and building information modeling (BIM)
technology has replaced traditional paper and pencil as the most common method for creating
design and construction drawings. Continual revision of plans on the basis of client needs and
budget constraints is often necessary.
• Architects may also assist clients in obtaining construction bids, selecting contractors, and
negotiating construction contracts. As construction proceeds, they may visit building sites to
make sure that contractors follow the design, adhere to the schedule, use the specified
materials, and meet work quality standards. The job is not complete until all construction is
finished, required tests are conducted, and construction costs are paid and a Certificate of
Occupancy has been issued. Sometimes, architects also provide post construction services, such
as facilities management. They advise on energy efficiency measures, evaluate how well the
building design adapts to the needs of occupants, and make necessary improvements.

• Often working with engineers, urban planners, interior designers, landscape architects, and
other professionals, architects spend a great deal of their time coordinating information from,
and the work of, other professionals engaged in the same project.

• Architects have to design a wide variety of buildings, such as office and apartment buildings,
schools, churches, factories, hospitals, houses, and airport terminals. They also design
complexes such as urban centers, college campuses, industrial parks, and entire communities.

• Architects sometimes specialize in one phase of work. Some specialize in the design of one type
of building—for example, hospitals, schools, or housing. Others focus on planning and predesign
services or construction management and do minimal design work.

• There is an increase in demand for architects with knowledge of ‘green' design. Green design,
also known as sustainable design, emphasizes the efficient use of resources such as energy and
water, waste and pollution reduction, conservation, and environmentally friendly design,
specifications, and materials. Rising energy costs and increased concern about the environment
has led to many new buildings being built ‘green.'

• Architectural firms sometimes outsource the drafting of construction documents and basic
design for large-scale commercial and residential projects to architecture firms overseas.

In the architectural profession, technical knowledge, management, and an understanding of

business are as important as design itself.
 Participants in the Construction Industry
• There are numerous participants that take part in the construction process. The key participants
are listed below and are discussed in depth

• Contractors

• General/Prime Contractors

• Construction Managers

• Commercial Contractors

• Commercial Project Owners

• Residential Construction Developers

• Subcontractors

• Highway Contractors

• Heavy Construction Contractors

• General Architects

• Landscape Architects

• Engineers

• Material Suppliers

• Construction Lenders

• Surety Companies

• Each of the above participants can and often do have multiple roles in the construction process.
For example, the owner could also be the general contractor (builder/developer). The general
contractor in addition to providing supervision may also do specialty work that would typically
be subcontracted (for example, concrete work). Construction lenders frequently hold an equity
position in a development partnership in order to participate in the management decisions and
to share in the profits. Anchor tenants, such as major department store chains participate in the
development partnership in exchange for signing long-term leases. Contractors and material
suppliers can obtain rights in the project by filing mechanics liens against the property.
 The Contracting Process
• When the owner/client determines that the project is feasible and that construction financing is
available, the owner will solicit bids from general contractors and/or specialty contractors.
Owners will use trade publications and newspapers to invite contractors to bid for the
construction contract. The notice will provide the contractors with the procedures to be
followed in submitting a bid.

• The bidding contractor obtains a copy of the plans and specifications prepared by the architect
from the owner to prepare for the formal bid. The bidding contractor solicits bids from
subcontractors, estimates direct material and labor costs, and evaluates the ultimate profit
potential of the contract. The amount of the bid covers the estimated costs and profit for the
construction project.

• The owner evaluates the submitted bids and will award the contract to the successful bidder.
The contract document contains the contract amount, project start and completion dates,
progress billing procedures, insurance requirements, and other pertinent information.

• In many cases, the landscape architect will oversee the bidding process on behalf of the
project's owner for landscape site work that does not include extensive roadway or building
work. The owner typically will then evaluate the bids after receiving review and
recommendations by the landscape architect.

A few architectural firms will act as the general contractor. These general contractors make bids on
the project (as described above). The architect reviews the bids and recommends one or more of
the general contractors to do the job. The owner/client selects and contracts with the general
contractor(s) of their choice. There may be more than one general contractor selected for different
phases of the project.
Roles played by architects during professional practice

ADVISOR

GENERAL MANAGER

AUDITOR

SUPERVISOR

UMPIRE

SOCIALLY CONSCIOUS PERSON

EDUCATOR

NATION BUILDER
Types of services offered by Architects & scale of fees
The professional service s, rendered by Architect means the services rendered pursuant to the
conditions of engagement and the agreed scale of charges entered into between the Client and the
Architect .in their agreement.

“Service”, under the consumer protection act, means service of any description which is made available
to potential users & includes the provision of facilities in connection with banking , financing insurance,
transport, housing construction etc ,. But does not include the rendering of any service free of charge.
Professional service by an Architect , falls under the ambit of “Service” and service tax has to be paid
for his services by the client.

Architects have to comply with professional conduct , and etiquette and code of ethics of the Architects
regulations 1989 , violations of any of the provisions shall constitute professional mis-conduct.

Architecture is primarily the art & science of designing spaces for multifarious activities ,where various
engineering services are rationally combined with Architecture’s basic element s of Space ,Structure &
Form. In its broadened scope & baffling complexity, Architecture has generated specializations such as
Structural Design , Urban Design ,Landscape Architecture, Interior design , The Recent specializations
also include Retrofitting of buildings, Architecture conservation & Construction Management.

Architectural design is essentially a product of an individual mind but realized through association of
experts from allied fields who contribute in the process of construction for ensuring the high quality of
the end product. The practice of the Architecture profession is regulated by the Architects Act 1972.The
Council of Architecture has prescribed the conditions of engagement and scale of charges under the
Architect’s professional conduct regulation 1989.
 Contract between client & Architect
Architect Contract Basics
An architect brings vision and structural know-how to his building project.
With an Architect Contract you can ensure that the expectations of your working relationship are clear
on all sides. Whether you're hiring an architect for an addition, a restoration job or a building from
scratch, you can create an Architect Contract using a few easy steps.
Use the Architect Contract document if:
You're providing architectural services to another business or individual.
Architect Contract
The Architect Contract is made effective as of -------------------- by and between-------------------
of---------------------- x ------------------ and-------------of --------------x---------------
DESCRIPTION OF SERVICES, beginning on--------------------- will provide to-------------------The architects
services described below and in the attached Exhibit A ( collectively the “services”) Architects services
shall include all Architectural and planning & engineering services in connection with the shell & Core
design for the project and without limiting the generality of the foregoing, will include the following.
SCHEMATIC DESIGN PHASE; Services provided by Architect in schematic design phase of the
construction include ;
1.Reviewing the project furnished by the client
2.Ascertaining the requirements of the project.
DESIGN DEVELOPMENT PHASE; Services provided by Architect on Design Development phase of the
construction include
1.Preparing construction documents, other documents to fix and describe the size, character of the
project as architectural, structural, mechanical , electrical materials and other elements based on
approved schematic design phase.
2.Advising clients on preliminary estimate of construction cost.
CONSTRUCTION DOCUMENT PHASE; Services provided by architects in Construction Document
phaseof the construction include;
1.Preparing documents drawings setting forth the detailed requirements based on the approved design
development documents
2.Advising client on construction cost
3.Helping client for the approval of Government Authorities.
BIDDING OR NEGOTIATION PHASE; Architect, following the clients approval of the construction
documents assist the client in obtaining bids or negotiated proposals and assist in awarding and
preparing contracts for the project.
Types of Architectural Firms

An architectural firm or architecture firm is a company which employs one or more Liscenced Architects
and practices the profession of architecture. It was only in the 19th century that architecture began to
be practiced as a full-time profession. An architecture firm usually has at least one "principal," a licensed
architect who is the Sole Propritor of the firm, or one who shares an ownership interest with the other
architects in the firm (either as a partner in a partnership, or as a shareholder in a corporation).
Sometimes the title of principal is limited to owners who hold a certain percentage of ownership
interest in a firm, or it may be expanded to include anyone with a leadership role in a firm. Some firms
may also use the title "principal-in-charge," which denotes an architect who oversees the firm's services
in connection with a specific project
Small firms with fewer than 5 people usually have no formal organizational structure, depending on the
personal relationships of the principals and employees to organize the work. Medium-sized firms with 5
to 50 employees are often organized departmentally in departments such as design, production,
business development, and construction administration. Large firms of over 50 people may be organized
departmentally, regionally, or in studios specializing in project types. Other permutations also exist.
However, most firms consist of fewer than ten people-and many architects (like doctors) practice in one-
or two-person offices. Many larger firms do not design individual houses. Smaller firms are often in a
better position to handle your needs if you are contemplating a residential or small-scale commercial
project
Advances in info.tech. have made it possible for some firms to open offices or establish alliances with
other firms in different parts of the world. It is important to note that increasingly developers in India
and China are hiring US and European firms to work on local developments. This is often coordinated or
sub-contracted by architecture firms in these countries - in effect outsourcing work to the US and
European firms
A firm might be composed of a variety of individuals at different points in their careers, but if they are all
heading in the same direction, then their diversity becomes a strength. Each employee and boss agrees
on where the firm is heading and what is of value. There might be Pragmatists, Poets, Artists, and
Builders. Or whatever combination of archetypes. What matters is the direction of the vectors. All agree
that the goal of the firm and the body of work point towards the same shared firm vision

Partnership firm
A partnership is an arrangement where parties, known as partners, agree to cooperate to advance their
mutual interests. The partners in a partnership may be individuals, businesses, interest-based
organizations, schools, governments or combinations thereof. Partnerships present the involved parties
with special challenges that must be navigated unto agreement. Overarching goals, levels of give-and-
take, areas of responsibility, lines of authority and succession, how success is evaluated and distributed,
and often a variety of other factors must all be negotiated. Once agreement is reached, the partnership
is typically enforceable by civil law, Partners who wish to make their agreement affirmatively explicit and
enforceable typically draw up Articles of Partnership to be made public, such as through a press release,
a newspaper ad, or public records laws. to be made public, such as through a press release, a newspaper
ad, or public records laws.
The major disadvantage of partnership is the unlimited liability of partners for the debts and liabilities
of the firm. Any partner can bind the firm and the firm is liable for all liabilities incurred by any firm on
behalf of the firm. If property of partnership firm is insufficient to meet liabilities, personal property of
any partner can be attached to pay the debts of the firm. A written agreement is advisable to establish
existence of partnership and to prove rights and liabilities of each partner, as it is difficult to prove an
oral agreement. Number of Partners is minimum 2 and maximum 50 in any kind of business activities
CORPORATE FIRM Or JOINT STOCK COMPANIES (like a pvt.Ltd company or Public limited company)

A Corporate Firm / corporation, is a company or group of people authorized to act as a single entity
(legally a person) and recognized as such in law. & your company's stock would be traded by the public
on an exchange . A corporation is, at least in theory, owned and controlled by its members. In a joint-
stock company the members are known as shareholders and each of their shares in the ownership,
control and profits of the corporation is determined by the portion of shares in the company that they
own. Registered corporations have legal personality and are owned by shareholders whose liability is
limited to their investment. Shareholders do not typically actively manage a corporation; shareholders
instead elect or appoint a board of directors to control the corporation in a fiduciary capacity.
Corporations can be "dissolved" either by statutory operation, order of court, or voluntary action on the
part of shareholders. Insolvency may result in a form of corporate failure, when creditors force the
liquidation and dissolution of the corporation under court order. The Limited Liability Act 1855, which
allowed investors to limit their liability in the event of business failure to the amount they invested in
the company - shareholders were still liable directly to creditors, but just for the unpaid portion of their
shares. (The principle that shareholders are liable to the corporation had been introduced in the Joint
Stock Companies Act 1844). This was subsequently consolidated with a number of other statutes in the
Companies Act 1862 An unlimited company or private unlimited company is a hybrid company
(corporation) incorporated either with or without a share capital (and similar to its limited company
counterpart) but where the legal liability of the members or shareholders is not limited & there is a low
risk of insolvency
Private Company; A private company can be a corporation, a limited liability company, a partnership,
or a sole proprietorship, as long as the shares are privately held and not traded publicly. Private
companies don't need shareholder approval for operational and growth strategy decisions made by the
company, as long as that is stated in their corporate documents.
Public Company; Public companies must inform shareholders about and get approval for the company's
operations, financial performance, management actions, and other decisions.

BUILDING - UP A CLIENT BASE FOR ARCHITECTURAL PRACTICE:

Architects are offering a wide range of design and technical services in architecture, urban design and
interior design. As well as developing new innovative and practical building design solutions they , also
specialize in the creative adaptation of existing buildings for today and the future. Their, professional
and friendly team ensure that working with Architects is an enjoyable and productive experience and &
know that their clients and stakeholders are involved and engaged at all stages of the design process.
With office locations in many places ,they are well placed to serve their expanding client base and
undertake projects providing services across a variety of building industry sectors . Architects are
securing Planning Approvals with close working relationships with Local Authorities across the country
with fees and services individually tailored to their client’s requirements, providing clear and easy
payment terms. For their services
Accounting methods, Service tax & GATS

Cash Receipts and Disbursements Method of Accounting

Generally, architects and landscape architects are permitted to select the cash or accrual methods of
accounting. They are not permitted to use the completed contract method of accounting or the
percentage-of-completion method of accounting.
Generally, the "cash method" of accounting is an acceptable method of accounting. However, there are
limitations on when this method can be used.
The general rule requires an item to be included in income (whether in the form of cash, property or
services) in the taxable year when actually or constructively received and permits a deduction for an
expense in the taxable year when paid. However, if an expenditure results in the creation of an asset
having a useful life which extends substantially beyond the close of such taxable year, such expenditure
may not be deductible, or may be deductible only in part, for the taxable year in which made.
Income may be actually or constructively received. If the taxpayer receives a check from a customer in
Year 1 but does not deposit or cash it until Year 2, it is included in income in Year 1, when actually
received. Constructive receipt occurs when the taxpayer has the unrestricted access to income that has
been earned.

Acounting methods: Architectural firms need to have good records due to possible litigation; but more
importantly, they need to know the status and profitability of each job that they work on to make good
business decisions. Therefore, the job files and other records are normally well kept. Missing or
incomplete job files are strong indicators of possible unreported income, which would require an
expansion of the audit
In India, Professional tax is imposed by various states. It is imposed on business owners, working
individuals, merchants and people carrying out various occupations.

Re: What is meant by tax and service tax

TAX:
A fee charged ("levied") by a government on a product, income, or activity. If tax is levied directly on
personal or corporate income, then it is a direct tax. If tax is levied on the price of a good or service, then
it is called an indirect tax. The purpose of taxation is to FINANCE government expenditure. One of the
most important uses of taxes is to finance public goods and services, such as street lighting and street
cleaning. Since public goods and services do not allow a non-payer to be excluded, or allow exclusion by
a consumer, there cannot be a market in the good or service, and so they need to be provided by the
government or a quasi-government agency, which tend to finance themselves largely through taxes.

GATS; The General Agreement on Trade in Services (GATS) is a treaty of the World Trade Organization
(WTO) that entered into force in January 1995 as a result of the Uruguay Round negotiations. The treaty
was created to extend the multilateral trading system to service sector, in the same way the General
Agreement on Tariffs and Trade (GATT) provides such a system for merchandise trade.

GATS is supposed to remove barriers to trade, members are free to choose which sectors are to be
progressively "liberalised", i.e. marketised and privatised, which mode of supply would apply to a
particular sector, and to what extent liberalisation will occur over a given period of time.

Legal obstacles to services trade can have legitimate policy reasons, but can also be an effective tool for
large scale corruption 
Construction Management

Construction Manager Vs. Architects: What's the Difference?

Although construction management and architectural design both play a significant role in the building
of residential homes, office buildings and apartment houses, there are many differences between the
two disciplines. Education, training and licensure are just a few of those differences. He knows how to
manage the construction process and coordinate the skilled trades necessary to complete a project.
Construction managers coordinate and schedule design and construction processes in the building of
office complexes, residential homes and industrial structures. A construction manager approves and
hires specialty contractors for certain operations, such as plumbing, electrical wiring and framing.
Construction managers usually work on a project from conception to completion. On large projects, they
may be responsible for only one segment of the operation.
Architects are Master builders : Throughout ancient and medieval history, most architectural design and
construction was carried out by artisans—such as stone masons and Carpenters rising to the role of
master builder.  Paper was not used in Europe for drawing. Pencils were used more often for drawing by
1600. Until modern times there was no clear distinction between architect and Engineer, who designed
buildings and structures that not only look good but are safe, energy efficient and functional. An
architect works with a client to set the parameters of the construction, such as construction objectives,
budget and requirements of the structure. They often do pre-construction assessments to determine
the feasibility of the project and any environmental impact the structure might have. When the pre-
construction assessment is complete, an architect will then develop the final construction plan, including
construction details and building appearance

Role of Project Manager in complex projects

Purpose
This aspect present a general review of the practical implications of building information modelling
(BIM) based on literature and case studies. It seeks to address the necessity for applying BIM and re‐
organizing the processes and roles in hospital building projects. This type of project is complex due to
complicated functional and technical requirements, decision making involving a large number of
stakeholders, and long‐term development processes. the main factors for a successful collaboration
using BIM, which can be recognised as “POWER”:
product information sharing (P), organizational roles synergy (O), work processes coordination (W),
environment for teamwork (E), and reference data consolidation (R). 

Introduction;
The perennial and troublesome problem in construction industry for PM’s is to improve project
Performance (PP) and the implications of the pm’s competencies becomes one of the key issues. The
Emotional Intelligence factor (EI) is relatively new approach in the construction industry. Large &
Complex projects place additional emphasis on PM’s need for EI. Because of the unique characteristics
such as Complexity of personnel to be employed, multiplicity of goals to be achieved, Intensive Capitol
to be used, Strong uncertainty of Activities, difficulty in coordinating with stakeholders, etc,.
Generally in smaller/ medium sized projects PM’s may achieve project success eventually through the
good use of Technical knowledge & IQ. Though their EI levels are relatively Low. By comparison, In large
construction’s many breakdowns occur & raises questions of competence
EI-Framework used for Project Manager’s work
Client - Architect - Contractor …Roles and Relationship

The root cause of disputes & complaints against Architects is often an incomplete understanding of the
Architects role & responsibilities in Design, Planning & Construction process. If insufficient data is
provided incorrect assumptions can can affect Architects duties in a project.
Special services or arrangements may be individually negotiated by the Architect with his client for
offering all required services
Understanding the Client - Architect - Contractor Relationship
A successful, efficient project considers the client's needs, their well being, and their budget. The Client,
The Architect, and the Contractor have very specific and necessary roles
The Client – have specific goals, expectations and a budget that is in alignment with these goals and
expectations.
The Architect – must guide the client, propose reasonable, sustainable design solutions, and provide
accurate detailed drawings. These must meet the client's requirements as well as applicable building
codes and zoning criteria. The finalized construction documents will become the client’s contract with
the contractor.
The Contractor – must be a responsible craftsman with expertise and the experience necessary to
manage the trades and to build the project as designed and documented. As with a 3-legged stool, all of
the three parties must work together in concert. They must maintain open dialogue and be able to
troubleshoot as a team in order to respond to unforeseen issues or client-initiated changes. Limiting or
eliminating any of these components will leave the client with a compromised solution.
Ultimately, the Client has two contracts, one is between the Owner and the Architect and the other is
between the Owner and the Contractor. The Architect works for the Owner during the Construction
Phase to Observe that the Construction Documents are being interpreted correctly.  The Architect
advocates for the Owner. Beware of the Contractor that does not want an Architect involved.
Remember, the Architect works for the Owner to see that the investment in the Contract Documents--
also known as Drawings and Specifications, is realized. This  "Three Legged Stool" model also creates
"checks and balances" that have been the successful precedence for many of the projects

Client - Architect - Contractor Relationship … in complex present day buildings

As new needs and technology have emerged traditional boundaries between different professionals,
have created interdisciplinary work environments & provide holistic perspectives for innovative
solutions Further the digital innovations have changed institutional roles & forms of interaction and
relations across a wide range of contexts. Understanding the conflicting interests ,areas of skill,
expertize, jurisdiction & status has become very critical.

There is a growing body of research & the use of Building formation modeling (BIM) on the role of
construction professionals for collecting Data & the role of Architects & their interactions might change
the implementation of BIM in the construction process organizations.

BIM is still a slippery concept with CAD & related Data to a broader one across the life cycle of the
building design method of National Inst of Building Science (NIBS) as BIM changes the roles and
relationships of projects participants & will lower the costs & time required for construction of property.
Various issues in construction process:

1.The construction industry is plagued with poor image & reputation 2. Design changes affect
construction. Many times over specifications proves costlier & unnecessary 3. Late payments are a
factor of Importance which affect for delays & qualitativeness. 4. Time restraints & reliance on
competitive tendering procedures affect qualitative progress of work 5. A long term strategic planning
will always helps good qualitative & sustainable construction.6. Absentism of Labor affects completion in
time and results in cost over runs. 7. Low plant overruns for equipment's brought for work, affects cost
aspects as heavy use age charges are paid affecting contractors profit. 8. Inexperienced management &
supervision with poor workmanship affects qualitativeness of construction. 9. Tendering problems
creates a an atmosphere of hard bargaining which is not conducive for good relationship. 10. Tender
periods are very short & puts bidders under preasure to meet deadlines often resulting in errors in
costing & high levels of risk.as they are not involved in design stage.

CONTRACT

Principles of contract;     

Contract: An agreement between two or more parties to perform or to refrain from some act now or in
the future. A legally enforceable agreement.  

•     Unilateral Contract: A unilateral contract arises when an offer can be accepted only by

theofferee’s performance •     Bilateral Contract: A bilateral contract arises when a promise is given in
exchange for a promise in return

•     Agreement: One party must offer to enter into an agreement, and the other party must accept the
terms of the offer

•     Consideration: Something of value received or promised, to convince a party to agree to the deal;

•     Contractual Capacity/ competent parties: Both parties must be competent to enter into the
agreement;

•     Legality: The contract’s purpose must be to accomplish some goal that is legal and not against public
policy;

•     Genuineness of Assent (Arguably part of agreement): The apparent consent of both parties must

be genuine; and

•     Form: The agreement must be in whatever form (e.g., written, under seal, etc.) the law requires

•     The vast majority of contracts are informal (without a seal)

ISSUES INVOLVED IN TENDER PROCESS in large projects

1. TENDER PREPARATION- TENDERING- TENDER EVALUATION

2. FEASIBILITY STUDY- DESIGN TENDER - TENDER PREPARATION
3. THE TENDER PROCESS; Thinks of Project Definition and Scoping Selection Process For Tenderers
Tender Documentation Criteria for Selection
4. THE TENDER PROCESS CALL FOR TENDERER TENDER MEETING AMENDMENTS TO TENDER
DOCUMENT SUBMISSION AND CLOSING OF TENDER
5.  TENDER PROCESS- TENDER ANALYSIS -TENDER CLARIFICATION- TENDER
SELECTION & AWARD
6.  TENDER ANALYSIS analyses work experience, completion period
Price affordability of the company (finance, personnel etc.) Ongoing
projects Adequacy of the tender conditions
7.  CRITERIA adopted for  SELECTION ; COFORMITY –CAPABILITY- INNOVATION
PRICE for CONSTRUCTION PERIOD
8. TENDER REJECTION Non-compliance with tender conditions- -details not
completed - -Tender price too high / tender price is too low - - lot of work in
progress -- insufficient financial capability--- unsatisfactory work records

What is Tendering?
Tendering is the process of making an offer, bid or proposal, or expressing interest in response to an
invitation or request for tender. Organizations will seek and will select an offer or tender that meets
their needs and provides the best value for money. Tender request documents; also referred to as
invitations to tender, Requests for Tender (RTF), Requests for Proposal (RFP) etc outline what is
required, that is, what the requesting organization’s needs are. These documents also outline the
particular requirements, criteria, and instructions that are to be followed. Future tenders are generally
widely advertised to offer opportunities to a number of suppliers, encourage competition and provide a
greater pool of offers to select from. Interested suppliers will then prepare a tender; the documents that
outline the offer that they are making, and will include pricing, schedules as well as their eligibility for
the project or procurement. They will outline their advantage over competitors; provide information on
qualifications, competencies and experience.
The submitted tenders are then evaluated with regard to defined criteria. In a normal tendering
situation, this process should be conducted fairly and honestly, and in a manner that is free from bias or
favour. The offer that best meets all of the requirements outlined in the request, and provides value for
money should win the contract.. Tendering is utilised by: Government departments, offices and agencies
,Private sector companies and businesses , Non Government Organizations , Overseas markets and
businesses When becoming involved in a tendering process, it is important to understand your business'
suitability for the project; whether your business' current situation will allow for you to tender, as well
as your ability to manage the contract if you are successful in winning the tender.
Government Tendering provide a significant market opportunity for businesses. to ensure that the
process is conducted in accordance with ethical, fair and transparent practices. As the Government is
accountable to tax-payers and the society, they ensure that the tendering process is equitable and non-
discriminatory.
The core principle in Government tendering and procurement is achieving value for money. This does
not just refer to offering the lowest price or best offer. Private Sector Tendering There has been an
increasing move in recent times. And the types, range and amount of products and services they seek
are vast and differing, thus offering opportunities to a wide range of businesses., as well as having a
greater choice in selecting a supplier that offers value for money. However, the private sector has the
luxury of having a much more flexible tendering process, in comparison to the public sector
(government). As the requirements of transparency and accountability greatly differ between the two
groups, private sector companies are not required to have such stringent and prescriptive procedures.
Without such tight constraints, the private sector can often make the process simpler and more flexible,
and tenderers generally have fewer requirements to adhere to when submitting a tender.
Quality, reliability, efficiency, and added value are important factors in any tender offers that are sought
after when evaluating tender submissions. Other factors include. Authenticity and insight Does the
bidder have genuine, substantiated knowledge and experience of the sectors of activity in which the
business is engaged & Is there a sense that this bidder is the one best placed to work with the client in a
productive team effort Risk and professional accountability:. Has the bidder taken account of the risks
associated with innovation Flexibility and responsiveness: Does the bid communicate a readiness to ‘go
the extra mile' to provide maximum value in meeting the client's requirements, and a willingness to
adapt methods and procedures in response to unforeseen changes in the requirements of the contract?
 Overseas tendering Tendering for overseas contracts can be attractive for businesses however may well
prove challenging due to the number of difficulties involved in the process. It is important to therefore
approach overseas tenders with caution and develop an understanding of potential difficulties in areas
such as; communication, differing jurisdiction/legal considerations, added costs, and a lack of knowledge
and understanding of international markets.
Tender process The seven main steps in the tender process: 1. Tender process is determined: The
organization requesting the tender will determine the type of tender that will be used, as well as what
will be involved in the tender process. For more information, see Types of tender opportunities.
There are four main types of tender opportunities. These include: Open Tendering: An open tendering
process is an invitation to tender by public advertisement. There are no restrictions placed on who can
submit a tender, however, suppliers are required to submit all required information and are evaluated
against the stated selection criteria. Select Tendering: A select tender is only open to a select number of
suppliers. The suppliers may be a short list sourced from an open tender or be a compilation of
businesses that the organization has worked with previously.
Multi-stage Tendering: Multi-stage tendering is used when there are a large number of respondents. At
each stage in the process, the suppliers are culled to those who are most suited to the specific contract
requirements.

EMD (earnest money deposit) payment

earnest money is paid on the basis of certain terms and condition.
with the remainder due at a particular time. If the contract is breached
by failure to pay, then the earnest payment is kept by the recipient as pre-
determined (liquidated) or committed damages
For contractors whose EMD have been forfeited , (A penalty for a fault or mistake that involves losing)
hey are not eligible to participate for the period of one Year from the date of tender opening. 

Retention money :

Retention is an important aspect of managing a construction project. ... The money held back is

the retention, typically 5-10% of the total contract Cost on a construction job, The owner will receive
invoices each month from architects, engineers, and the general contractor. The contractor should show
the amount of work completed, and then request payment for only 90-95% of that amount. The money
held back is the retention, typically 5-10% of the total contract price. (There are often two levels of
retention on a project. The owner, will withhold retention from the general contractor. The general
contractor, in turn, withholds retention from each of his subcontractors.)

When a contractor completes a project there are usually a few items that need fixing. These items are
compiled into a list called a punch list. To get retention release, contractors have to complete their
punch list as well. 

In other words, retention is a tool that allows a project owner to withhold some payment to contractors
until the entire project is complete and a certificate of completion or certificate of occupancy has been
granted by the local authorities. Once this completion has been granted, the owner typically has 30 days
to release retention amount to the contractor.

Security deposit 

A security deposit is a sum of money held in trust either as an initial part-payment in a construction
process in addition to the EMD paid earlier by contractor. As this amount is quite heavy and as the
construction is also under way for completion, the security deposit is normally collected in the form of
Retention money from all stage payments made to the contractor. The same is to be released after the
completion of the project by the owner.

Mobilization fund;

Construction firms are always faced with the huge burden of securing funds for executing works on
contracts. The concept of mobilizing advance payment is an important mechanism. Used to overcome
contractors financial problems.

Mobilization is a monetary payment made by the owner to contractor for initial expenditures in respect
of site mobilization & a fair proportion of job preliminaries.

TYPES OF CONTRACT :

Construction contract is the warranty that the executed job will receive the specific amount of
compensation or how the compensation will be distributed.

There are a several types of construction contracts  

Construction contracts types are usually defined; by the way, the Compensation is going to be made like
Lump Sum or Fixed Price or Item rate contracts which may be Cost Plus Contracts or Time & Material

Fixed Price or Lump Sum

This type of contract involves a total fixed priced for all construction related activities. Lumpsum
contracts can include incentives or benefits for early termination, or can also have penalties,
called liquidated damages, for a late termination. Lump Sum contracts are preferred when a clear
scope and a defined schedule has been reviewed and agreed upon.

Cost Plus Contracts (Item rate contracts)

This type of contract involves payment of the actual costs, purchases or other expenses generated
directly from the construction activity. Cost plus contracts must contain specific information about
certain pre-negotiated amount (some percentage of the material and labor cost ) covering contractor’s
overhead and profit. Costs must be detailed and should be classified as direct or indirect costs. There
are multiple variations for Cost plus contracts and the most common are:

Cost Plus Fixed Percentage ; Cost Plus Fixed Fee ; Cost Plus with Guaranteed Maximum Price Contract ;
Cost Plus with Guaranteed Maximum Price and Bonus Clause.

Time & Material  contracts are usually preferred if the project scope is not clear, or has not been
defined. The owner and the contractor must establish an agreed hourly or daily rate, including
additional expenses that could arise in the construction process. The costs must be classified as: direct,
indirect, mark-up, and overhead. Sometimes the owner might want to establish a cap or specific
project duration to the contractor that must be met, in order to have the owner’s risk minimized

COTRACT  documents ; They are one of the most important pieces that will guarantee of a successful
project. This list contains the most common documents that must form part of every
construction contract.

In addition to this list, there are other numerous contract support documents that can be used in
combination with the standards documents. For example: Instruction Forms ; Time Extension Claim ;
Request for Information ; Preliminary Building Agreement ; Progress Payment Certificate ;
Practical Completion Notice ; Defects Document; Contract Information Statement

1.  Agreement; The most essential part of the contract documents.

2.  General Conditions This contract document will define the obligations and rights on how to execute
the project

3.  Special Conditions This is usually an extension of the contract and to the general conditions. This part
must specify specific conditions and

clauses to each particular project or job.

4.  Bill of Quantities This is formed by the list of diverse trades, and materials included that form part of
the construction. Sometimes this

document is not required by the contracting officer.

5.  Drawings ; All set of  drawings  that form part of the job to be performed. These drawings are
usually the latest drawings and must be

received by the contractor prior to the date of commencement. It must include all drawings from
consultants, and will constitute the entire

project being contracted.

6.  Specifications; The technical requirement to complete, execute and/or perform every little task or
material being incorporated in the

construction projects. It will add intelligence to the construction drawings ; specify common
standards, deviations accepted, materials

accepted and the required testing for all materials. Usually, specifications are composed by
referencing construction standards and codes

7.  Schedules ; The construction schedule is an important piece of the document. In this part, the
contracting office will know how and when the project will be

completed. Sometimes,contracts will require updated schedules throughout the construction

progress, and might form part of the monthly, or agreed

term, application for payment

8.  Pricing Schedules; Breakdown of all items being incorporated in the const’n proj. This is usually the
base of the application for payment It can be detailed per item

or  in a lump-sum form not specifying individual items.

9.  Insurances; This provide the guarantee to the owner that the contractor has the means and the
economic backup to perform the construction contract.

Tender stage;

tender stage in public projects can be subdivided under 4 headings

1. prep of tender document

2. inviting & opening of tender

3. pre-qualification of tenderer’s

4. evaluation & award of work

Preparation of tender document: The tender after acceptance & signing becomes the CONTRACT.- a
legal doc. An ambiguous agreement leads to poor contract performance & litigations. It also gives an
opportunity to a contractor to make profit out of ambiguous conditions. It has been observed that the
Tender documents are prepared in a hurried manner without checking the conformity among the
scheduled items of drawings, specifications and contract conditions etc,. This generally happens due to
the reason that different parts of the tender documents such as Schedule of quantities, specifications,
drawings & general conditions prepared by different people are compiled without co-relating them.
Sometimes they are copied from old tenders without giving a thought to the applicability of the
conditions to the work in question.
A few examples highlight some deficiencies in the preparation of tender document is described below to
prevent the deficiencies
• Adopt updated standard bidding document
• Ensure conformity among nomenclature of items, specifications, drawings, General & special
Conditions.
• Avoid stipulating such conditions in the contract which are not feasible to be operated
• Stipulate Performance, Guarantee clause to eliminate non serious bidders.
• Conduct Pre-Bid meeting a) To bring Clarity regarding the spirit of various provisions & b) To
bring necessary modifications, if required, Make minutes of the meeting as part of Agreement.
• Provide Clauses to deal with ambiguous provisions in the tender document submitted to
contractor with any order of precedence (to explain correctly)
• Stipulate all prevailing govt. policy orders such as purchase preference policy, Customs
exemptions for materials to be imported etc,.
• Provide enough safeguards against misuse of mobilization advance.
Inviting & Opening of Tenders;
The award of the public contracts through open tender is to ensure a transparency in public
procurement to maximize economy & efficiency in public procurement to promote healthy competition
among tenderers & to provide fair & equal treatment to all the tenderers & to eliminate irregularities,
interference & corrupt practices by authorities concerned. This is also required by the article 14 of the
constitution of India.
Normally three modes of tendering are adopted. Namely,
• Open tendering ( for all public projects)
• Closed or Limited Tendering ( for Private projects )
• Single Tender on Nomination Basis ( for works of Specialized nature visualized in both
Private / Public Tenders.)
In an open tender, bids are invited giving wide and adequate publicity. This is the most preferred mode
of Tendering.
In the case of small value of works, Urgent Works, and in case where a few bidders are available in the
market, limited tenders from such bidders who have been empanelled are invited. In case of Limited
Tenders, the empanelment should be done in a transparent way & updated periodically.
Award of Contract on nomination basis, which is also called as a single tender is to be resorted to only
under exceptional circumstances such as natural calamities, & emergencies or there were no bids to
repeated tenders or only where one supplier has been licensed ( a Proprietary item ) in respect of goods
sought to be procured
 Tender
notice