Construction Management

1118 Words5 Pages
Chapter 4
Construction contracts. Author: Paweł Kotas, Polska

Construction as a service activity having many dimensions. Starting from ideas, thru find funds, investor, design construction, find contractor, phase of construction, meet the requirements which investment needs to be in use and complete facility.
All these aspects are associated with large amounts of documents, permits.
In this essay will be described various types of contracts between the investor and the contractor.
Contract is an agreement between two or more parties to do something for a consideration establishes the basis for a contract. Because of business aspects of contracts problems can be solved in the court.
Then the most
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Depending on the confidence of the contractor on its own estimates and its propensity on risk, a contractor can slightly raise the unit prices on the underestimated tasks while lowering the unit prices on other tasks. If the contractor is correct in its assessment, it can increase its profit substantially since the payment is made on the actual quantities of tasks; and if the reverse is true, it can lose on this basis.
Negotiated contracts
An owner can enter into contract with a constructor by negotiating the price and method of reimbursement. This type can during the contract enter into fixed-price or unit –price contract. * Cost Plus Fixed Percentage Contract
For certain types of construction involving new technology or extremely pressing needs, the owner is sometimes forced to assume all risks of cost overruns. The contractor will receive the actual direct job cost plus a fixed percentage, and have little incentive to reduce job cost. Furthermore, if there are pressing needs to complete the project, overtime payments to workers are common and will further increase the job cost. * Cost Plus Fixed Fee/ Variable Percentage Contract
Under this type of contract, the contractor will receive the actual direct job cost plus a fixed fee, and will have some incentive to complete the job quickly since its fee is fixed regardless
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