The design drawings and specifications are provided to the

contractor on the basis of which the contractor analyses his rates and quotes the single lump-sum figure which is
the total contract value of the project. The quoted rate is the amount for which the contractor agrees to build the
required facilities including raw materials, covering all risks and uncertainties.
• For the owner it is advantageous that he/she knows the exact amount of funds required.
• Some milestones or stages are specified for the payment.

quantities of all items are

given in BoQ, Along with detail specifications, drawing in tender documents. Contractors analyse their own rate and
quotes the rates of every item of work. Payment to the contractor is made based on actual quantities of work done
as per the quoted (and agreed) rate.
• Most of the construction works in Nepal are carried out under these contracts.
 the detail estimates with quantities, their
respective rates, totals, and grand total are found out by owner/ department and provided to the
contractor. The contractor analyses his own rate and quotes his rate. Contractor’s rate is compared
with the client’s amount and difference in percentage is found out,

owner agrees to pay certain percentage of amount

of actual material used and may be labour used (depending upon the contract).
• Managing Contractor is appointed at the earliest possible time.
out planning, managing, and coordination of the project.
• The design services are provided by designer who is separately appointed by client.
• The client has to deal with only the principal contractor.
• Usually, the contractor
cranes etc. to the sub-contractors)
• Management contractor is responsible for quality and time (as per Public Procurement Regulation).
 client appoints single (principal) management contractor
contractor takes care of design and construction
the Design, Management Contractor sublets the works to subcontractors

The contractor takes up the responsibility for both design and

construction. Owner supervises or hire a consultant to supervise. done by the owners who do not have a
separate in-house design team.
• Design and construction is done by a single entity (conflict between designer and contractor are
avoided)
• In most cases, a cost-plus-fee contract or a lump-sum contract is often suitable and are adopted.
• Usually, the contractor should have both design and construction capabilities.
• In large projects usually separate specializing in design and construction can always form a joint
venture with appropriate legal and financial arrangements.
• This type of contract reduces the number of disputes among contractor consultants and owners.
• Risks of the project lie on contractor.
• 3.2: Turnkey Contract (6g{ sL ;Demf}tf) as the name suggests this contract the owner entrusts all
the responsibility to the contracting agency and the owner simply wants to “turn the key” at the
completion and handover of the structure.
• The process involves document preparation stating the detailed requirements of the client
and invitation of the proposal. The best proposal is then selected
• This contract includes all the technical works like surveying, design, technical specifications,
construction, test operation, and handing over are entrusted to a single entity.
• It is suitable for large and complex projects involving civil, chemical engineering, electrical,
mining, petrochemical, equipment fixing, in industries.
• The scope may include the training of operators.
• Examples, Engineer India Limited (EIL), Larson and Toubro, Hindustan Construction Company
(HCC), Nippon Company, Japan etc. They carry out turn-key projects
3.3 Design, Supply and Installation Contract [l8hfOg, cfk"lt{ / h8fg ;Demf}tf] :-
• In this contract contractor is chosen for specialized works, like, Power Plant, Boiler House,
Pumping Set or complex project for their design, supplying, installation including testing and
hand over the project to the owner. Contactor must provide training to the staffs as well. Any
two of these three works can also be contracted if required.
3.4 Design, Supply, Installation and Maintenance Contract [l8hfO{g, cfk"lt{, h8fg / dd{t ;Def/
;Demf}tf]:-
Same as the above except additional work of maintenance of the installation that is to be
performed in this contract.
 In this contract the contractor is chosen to
build the infrastructure on its own expense (finance), operate the same within
stipulated time to recover the investment and transfer the infrastructure to the
owner. Such infrastructures could be an Airport, Power Plant, Hydropower, Highways,
Water Supply system etc.
• Suitable for the client who does not want to invest but wants to develop the
infrastructure.
• Suitable method to attract and encourage the private sector into public development
projects, also known as Public-Private Partnership (PPP)
• Also suitable where the heavy cost of infrastructure incurs.
[lgdf{0f / dd{t ;Def/ ;Demf}tf]: Contractor is chosen for the
construction of mega or huge project like Fast Track, Airports, Highways, Power Plant,
Thermal plants or any complex works to construct and maintenance of the same structure
for contracted period of time. The maintenance part of the contract motivates the
contractor to maintain the quality of the structure to some extent.
 : A contract adopted within normal construction or design-build contract. In this owner/ client and
contractor together form a project team based on mutual confidence and work together to manage the project to
a successful conclusion yielding a profit to both the parties. This relationship is called partnership or alliance.
• Fundamental philosophy is mutual trust and confidence.
• At first, parties set out a project goal and set out to achieve that goal.
• Dispute is resolved as per the dispute resolution agreement done earlier.
In case of a very large project, no contractor may have adequate resources to bid
and execute the project. In such a case two or more contractors pull their resources together to form a
joint venture. Contractors usually form this type of joint venture for a particular project by signing
an MOU (Memorandum of Understanding) or JV agreement.
• The philosophy of JV is the mutual teamwork for the project for which an individual contractor may not have
adequate resources like, cash flow, expertise and experience.
• The JV is a separate entity apart from the contractor, in the sense that the name of JV, official stamp, account
are all in the name of JV.
• JV is appropriate and beneficial for the foreign construction companies attempting to work in the host country.
The contractor of the host country is also benefited with the foreign contractor with the opportunity to grow.
• JV is thought to be a vehicle of Technology Transfer (TT).
 Nepal (GON), all the construction contracts are regulated by Public Procurement Act
2063 [;fj{hlgs vl/b P]g, @)^# ] and Public Procurement Regulation 2064 [;fj{hlgs vl/b lgodfjnL, @)^$]

FIDIC stands for Federation Internationale des Ingenieures Conseils[French] (i.e. International
Federation of Consulting Engineers).
It is an international Agency that formulates conditions of contract recommended for Design,
construction, operations of works to be carried out under contract on worldwide basis in
construction industry and many Multilateral Development Banks have endorsed its standard
forms.
FIDIC conditions of contracts are prepared by Independent Consultants of Europe to make fair
/impartial [fair distributions of risks and responsibilities] documents to both owner and contractors.
FIDIC
I. FIDIC founded in the year 1913 in Europe (78 countries as members)
II.FIDIC’s secretariat is situated in Switzerland.
III.
FIDIC forms of Contracts were evolved over a period.
IV.The FIDIC Conditions of contract are equally suitable for use on domestic contracts. So, referring to its
Condition of Contracts could be of valuable guidance.
V. The Development Partners (international Donors) of Nepal sometimes requires to use FIDIC condition of
contract.
VI. There are 10 colour books on different types of contracts on various disciplines like Civil Engineering,
Electrical and Mechanical work, consultant hiring, design and build, design-build and transfer etc. Examples:
FIDIC Books on Condition of Contracts:
i) Red Book- Civil Engineering Condition of Contract for Construction; recommended for building or
engineering works designed by the Employer or by his representative (the Engineer). Construction is
carried out by contractor.
ii) Yellow Book- Conditions of contract for Plant Design (Electrical and Mechanical works) and Build, (Even
building designed by contra
iii) Orange Book- Conditions of contract for Design-Build and Turn-key.
iv) Silver Book- Condition of contract for Engineering Procurement and Construction) [EPC]. or Turnkey
Projects Suitable for BOT. Here contractor bears all risks.
v) Gold Book:
vi) Green book: short form of Contract. Suitable for, small contract ($ 500,000.00) short time say 6 months and
works involve is relatively simple or repetitive.
vii) The White Book; Client Consultant Model Services agreement (The White Book)