Factors in selecting contract types in construction

What factors affect the selection of construction contracts? How do you select a construction contract? What are the different types of construction contracts?

They include the following: (a) Price competition. Normally, effective price competition in realistic pricing , and a fixed-price contract is ordinarily in the Government’s interest. Price analysis , with or without competition , may provide a basis for selecting the contract type.

Factors in selecting contract types. At the early stages of any construction project, the owner with his engineer or consultant prepares necessary documents for the tender process, which will be included in the contract. These documents are called contract documents. See full list on theconstructor.

The different types of documents in a construction contract are as follows- 1. General conditions 2. Special conditions 3. Drawings and specifications 4. Q (bill of quantity) 5. Letter of acceptance 6. The conditions of contract are terms that rule the relationships between the owner and the contractor, define each party’s rights and obligations, specify the method of payment and determine actions required when existing any disputes between the owner and the contractor. One of the characteristics of construction projects is uniqueness. Every project has its particular circumstances, so it’s crucial to select the contract type which suits the project. The owner develops the process of selecting the type of contract. Each type has its advantages and disadvantages concerning the owner and the contractor.

There are many types of contracts used in construction. They are categorized into two major groups as per the method of payment to the contractor. The following are the types of construction contracts generally used in construction projects: 1. Unit price contract 3. Cost-plus contract 4. In this type, the contractor bids a single fixed price for overall activities in the project scope. All risks are assigned to the contractor, and there isn’t any risk carried by the owner. This contract is ideal when the.

The total price of the project in the unit price contract is based on the price of each item’s unit. The contractor is paid as per the rates of items specified in the bill of quantity. The construction of the project can be started before finishing the designs, so the total cost of the project will be uncertain at the early stages of the project. Target cost contract has common features of the lump sum and cost-plus contracts.

There is a risk carried by the contractor in case of an increase in the cost of construction projects. The fixed-price contract is a legal agreement between the project organization and an entity (person or company) to provide goods or services to the project at an agreed-on price. The contract usually details the quality of the goods or services, the timing needed to support the project, and the price for delivering goods or services. For commodities and goods and services where the scope of work is very clear and not likely to change,. In a cost-reimbursable contract , the organization agrees to pay the contractor for the cost of performing the service or providing the goods.

The project uses a -reimbursable contract to pay the contractor for allowable expenses related to performing the work. Since the cost of the project is reimburs. Vendors and suppliers usually require payments during the life of the contract.

On contracts that last several months, the contractor will incur significant cost and will want the project to pay for these costs as early as possible. Rather than wait until the end of the contract , a schedule of payments is typically developed as part of the contract and is connected to the completion of a defined amount of work or project milestones. These payments made before the end of the project and based.

Numerous factors guide the selection of the best contract type for a given purchase. Extent of competition ( in realistic pricing). It can be used in both the private and public sectors, as it includes optional provisions dealing with official secrets, transparency, discrimination and bribery as normally required by public sector clients. The evaluation and selection of contractors leading to the award of construction contracts is a vital part of the construction process. Negotiated contracting, a process during which a contractor is selected without competition, is sometimes referred to as direct selection.

University construction contracts in excess of $5000. Before the code was amende The Regents did have the right to negotiate and award sole-source contracts of any dollar amount. The right to negotiate contracts is now restricted b. The contract is awarded to the lowest responsible bidder submitting a responsive bi or all bids are rejected. Suggested methods include: 1. Regularly solicit bids from all responsible contractors who have expressed interest in receiving informal bids, or 2. Select contractors on a rotating basis from a pool of responsible contractors able to perform such work.

Identical sets of bidding documents must be issued to all bidders at approximately the same time. A contract may be negotiated with a contractor if the construction cost of the project does not exceed $5000. For negotiated contracts, the contractors must be selected on a rotating basis from a pool of contractors able to perform the type of project work required. Examples of further conditions when negotiated contracting might be appropriate include, but are not limited to, the following: 1. A contractor is already working near the project site on other work. If this contractor were selecte mobilization costs would be save and congestion and coordination problems would be avoided.

The Work must be performed immediately to protect the health, safety, a. Both the contracting mode chosen and the type of bidding used will affect the duration of the bidding period. Clients and users should be made aware of the length of the required bidding period. The Regents to adopt policies and procedures to facilitate the participation of small businesses, particularly small disadvantaged business enterprises (DBE), women-owned business enterprises (WBE), and disabled veteran business enterprises (DVBE) in business contract.

These Procedures and Required Guidelines are applicable to Bidder Qualification only. For guidance to all other facets of the Best Value Program consul. A number of factors need to be considered before the choosing contract strategy.

Responsibilities such as design, construction , quality control, procurement, safety, installation and commissioning need to be determined. The risks also need to be allocated between parties. The next stage is the process of appointing the contractor. To find out more see: How to appoint a contractor.

Find out more Related articles on Designing Buildings. Construction contract. Due diligence when selecting contractors or subcontractors. As such, these types of contracts are generally large dollar, external support type contracts. First of all, the cost plus a percentage of cost and percentage of construction cost methods of contracting are prohibited contract types.

In these contract types, in addition to the contractor’s costs such as time and materials, a percentage is added to the contractor costs to cover the contractor’s overhead costs. Contract documentation.