PROFESSIONAL

PRACTICE
AND ETHICS
 LUMPSUM CONTRACT
 In lump sum construction contract contractor bids a single fixed price for all activities in the
project scope. This method is particularly used for large construction projects and is a
conventional but most popular types of construction contract.

 The contractor bears the risks associated with this contract and is responsible for estimating
project costs from drawings including overhead and his profit to determine the price of the project.

 Lump sum construction contract is considered as the most effective means of reducing
construction price and is useful when projects and its activities are well defined.
 ADVANTAGES AND DISADVANTAGES
OF LUMPSUM
 There is certain degree of limitation over owner’s exposure as well as accountability at the time
construction since he has already agreed upon a fixed rate.

 Since the contractor has accepted a fixed price for the construction, the owner is not liable for any over
expenditure. This is the most important benefit.

 It is much simpler to get construction loan with a Lump sum contract as it provides a high degree of
certainty as far as cost is concerned.

 It is much easier to supervise and manage Lump sum contracts.

 The payments are made after fixed durations and that too based on the amount of work completed
unlike the balloon payments in other arrangements.
 Advantages of Lump Sum Construction Contract for the Contractor are as
follows:

1. There is a greater margin for profit realization for contractors as well as designers.
2. Due to its general reliability, contractors try to enhance quality of production and performance and try
to complete work faster.
3. Lump sum contracts offer comparatively easier assessment of soil conditions, bidding prices and pre-
construction analysis which makes selection process less tedious.
4. Accounting related to lump sum contracts are low-intensive that diminishes overhead expenses of the
contractor and allow for stable cash flow.

Besides above benefits, lump sum construction contract promote better interaction and association between
the owner, contractor and designer. The contractors encourage effective project execution to earn better
profit margin. The owner is also aware of the expense incurred due to change orders he needs.
 Disadvantages of Lump Sum Construction Contract

1. Lump sum contracts pose greater risk to contractor.

2. Quantifying changes is a big challenge. Such contracts demand documentation and record keeping of change orders at
all stages that further requires more paperwork.

3. Rejection of change order requested by the employer.

4. The building and construction design and plans have to be completed well before beginning the execution of activities.

5. The overall construction completion could take longer than other contractual alternatives.

6. Since the contract is based on fixed price, the contractor may start using sub-standard means and methods and
products. In such a case, the owner should specify building materials well in advance.

7. Lump-sum contracts usually end up with higher fixed price to cover unforeseen circumstances. Owners are
responsible for unpredicted conditions which are beyond the control of either party
 BUILDING DESIGN AND
CONTRUCTION COST
 HOUSING:
Individual/independent House – 7.5% on the cost of works assigned
Single Block Housing sites upto 0.5 hectares – 5.0% on the cost of works assigned
Sites more than 0.5 hectares and upto 2.5 hectares – 3.5% on the cost of works assigned
Sites more than 2.5 hectares and upto 5 hectares – 2.5% on the cost of works assigned
Sites more than 5 hectares – 2.0% on the cost of works assigned
 All projects other than housing: 5.0% on the cost of works assigned
 Repetition of building in same campus : 2.5% on the cost of works assigned
 Repetition of building elsewhere : 3.5% on the cost of works assigned
 Site development : 2.5% on the cost of works assigned
 Architectural conservation, retrofitting, addition, alterations - 7.5% on the cost of works assigned
 Interior architecture, signage and graphic design : 7.5% on the cost of works assigned
 Landscape Architecture : 7.5% on the cost of works assigned
 Urban Design : 1.0% on the cost of works assigned
 Documentation and communication charges : 10% of professional fees
 Advisory consultancy charges :Rs.10,000/- per day for outstation project ; Rs.4000/- per day
For local project

The Architect shall be paid professional fees in stages, consistent with the work done. The stages of
payment are divided during the course of the construction and shall include the following:
CLIENTS BRIEF – STAGE 1:
On appointment of signing of agreement – Rs.20,000/- or 5% of total fees payable, adjustable
At the last stage, based on the rough estimate of cost.
CONCEPT DESIGN – STAGE 2:
On submitting conceptual designs and rough estimate – 10% of total fees payable, based on the rough
estimate of cost.
PRELIMINARY DESIGNS AND DRAWING – STAGE 3:
On submitting the required preliminary scheme for the client’s approval along with the Preliminary
estimate of cost – 20% of total fees payable, less payment already made, based on preliminary estimate
of cost.
DRAWINGS FOR CLIENT’S/ STATUATORY APPROVALS – STAGE 4: On incorporating clients
Suggestion and submitting drawings for approval from the client/statutory bodies – 35% of total fees payable, less payment
already made, based on preliminary estimate of cost.

WORKING DRAWINGS AND TENDER DOCUMENTS – STAGE 5: On preparation of working drawings,

specifications, schedule of quantities, estimate and tender documents – 45% of total fees payable, less payment already made,
based on preliminary estimate of cost.

APPOINTMENT OF CONTRACTORS – STAGE 6: On inviting, receiving and analysing tenders and advising the client on
appointment of contractors 55% of the total fees payable, less payment already made, based on preliminary estimate of cost.
CONSTRUCTION - STAGE 7: On submitting working drawings and details required for commencement of work at site –
65% of total fees payable, less payment already made, based on accepted tender cost.
On completion of 20% of work at site – 70% of total fees payable, less payment already made, based on accepted tender cost.
On completion of 40% of work at site – 75% of total fees payable, less payment already made, based on accepted tender cost.
On completion of 60% of work at site – 80% of total fees payable, less payment already made, based on accepted tender cost.
On completion of 80% of work at site – 85% of total fees payable, less payment already made, based on
accepted tender cost.
On virtual completion of work at site – 90% of total fees payable, less payment already made, based on
accepted tender cost.

COMPLETION – STAGE 8: On submitting completion report and drawings for the project required in
obtaining completion/occupation certificate from statutory authorities on the issue of as-built drawings –
100% of the total fees payable, less retainer and payment already made, based on actual total cost.
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