Contractual

Provisions
Md. Abdul Aziz
Lecturer
Department of Civil Engineering
Port City International University
Chittagong, Bangladesh.
Outline
 Contract

 Civil Engineering Contract

 Simple Contract

 Contract Classification

 Types of Contracting

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Contracts
A contract is essentially an agreement between two or
more parties to do or refrain from doing something.
Essential elements of contracts:
The essential elements of contract which have to be
satisfied are-
The capacity of the parties of contract
The genuineness of consent of the parties who make
the offer and those who accept it
The objectives of the contract should be legal and
possible

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Civil Engineering contracts
There are invariable formed by a process of offer and
acceptance both which are in writing.
The offer is made by a contractor to an employer to
carry out the work set out in contract documents.
Normally on the form the tender issued to him.

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Simple contract:
It is formed when a tender is submitted by a tenderer is
accepted by the employer.
A point that tender and acceptances should be
unconditional.
But in practical case, this situation may arise that some
conditions have to be demanded. Then parties
negotiate. If employer does not accept the conditions
demanded by contractor, the tenderer may reject the
tender.

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Contract classification:

Admeasurements or Re-measurement Contract

Lump-sum contract
Cost/Reimbursement contract
All in contract
Direct labor contract

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Admeasurements or Re-measurement
Contract
Most civil engineering contracts are of this type. It has two
main components-
Bill of Quantities
Schedule of Rates
Here detailed list of all items of work required to be carried
out with approximate quantities are prepared against which
the tender enters unit price.
As the work proceeds, the actual quantity extended under
each item is subjected to admeasurements at the quoted rate.
 If estimated and actual quantity has very small difference,
then payment is done according to quoted rates.
As re-measurements is done for actual quantity of work.

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Admeasurements or Re-
measurement Contract
Advantages:
The contractor is paid for the amount of actual work he
does
Which remaining a fair basis for payment there is freedom
for the alternation of work
Can compare total price or any item
The tender is given a clear conception of work involved by
the way of bill
Most of the contractors are familiar with this type
Disadvantages:
Require more time
Require more cost

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Lump-sum contract:
Here for total work to be done, a quantity of money is
paid.
Advantages:
One must know exactly what one is to construct at the
time of going to tender.
In all other respects, it follows much the same lines as
an admeasurements contract.

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Cost/Reimbursement contract:
The total payment is the sum of cost of contractor, and
a percentage of cost.
The cost of contractor is set by the agreement with
employer. The percentage of cost varies according to
condition. It may be-
Cost + % fee
Cost + fixed fee
Cost + fluctuating fee

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All in turn key contracts:
Here employer invites a contractor to submit an all-in
bid or turnkey bid which is for the provision of the
whole of the work including its design.
The employer may also wish in such a contract to be
financed until the project is earning money.
This is not most likely used in civil engineering
contracts.

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All in turn key contracts:
Advantages:
All responsibilities are of contractor. Owner just have
to say his requirements
Can be seen whether the project is profitable or not.
Disadvantages:
Contractors have to be specialized. Otherwise, owner
have to face many problems
Sometimes rate schedules are taken if additional work
is done

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Direct labor contract:
Employer carried all the work out in his own account
employing the staff and labor and using his own or
acquiring or hiring plant and buying the materials
both temporary and permanents such as are required.
Now a days, not used in big projects.

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Direct labor contract:
Advantages:
Can design and construct exactly what are required
without any external interference from a contactor or a
consulting engineer
Disadvantages:
No incentive to complete the work at the least cost in
the shortest possible time.

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Types of contracting:
Full turnkey contracting
Partial turnkey contracting
Traditional client co-ordinated contracting
Management contracting

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Full turnkey contracting
A single contractor takes total responsibilities of project
from design state to urn key to the owner.
Advantages
Maximum responsibility to one hand employer has
very small responsibility. Minimize the need for
employers to employ his own resource or engage
consultants
Completion of project within shortest possible period
Avoid diseconomy
Minimum possibility of claims

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Full turnkey contracting
Disadvantages
The employer has to be very careful to choose the right
contractor
Employers requirement have to be very clean and specific
A very few contractors have such capacity to do it
Can’t make any change one selection of contractor is made
If contractor finds more risk it will be reflected in his price
Contractor tries to make profits such as possible at every
stage of construction.

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Partial turnkey contracting
Here employer undertakes certain work either directly or
through consultant or other contractors independently
of the turnkey contractor.
Advantages
As for total turnkey
Employer can take some risk and responsibility to do
some work. It reduces cost.
Disadvantages
Coordination with various contractor turn key
appointed by owner is difficult
For above reason time and cost are increased

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Traditional client co-ordinated contracting
Advantages
No scope for mistake or lower quality of work done by contractor
Scope to separate the project into some activities
Scope to choose the cheapest way for each activity
Change for requirement may be done
Employer can independently design and supervise the work. Full
control on work.
Disadvantages
Employer need more resource, manpower
More time needed then turnkey
More risk is involved
Employer will not know the out turn cost of the project at the
start and must himself bear the cost of any project cost over fund

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Management contracting
Advantages
Economy can achieve if management contractor is
selected earlier and if it has necessary technical
competence
Less time than client coordinating contract
Also have some advantages of turnkey contract
Disadvantages
Employer has to face more risks and claims
Employers will not know the out turn cost of the
project at the start

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