The Complexity in Construction Projects

1284 WordsJan 30, 20185 Pages
Construction Projects are intrinsically complex in nature. It varies in different aspects such as size, nature, Contract Value etc. It involves different parties including the Client, Designer, Engineer, and the Contractor, whose interests vary from each other. Under these complex circumstances, the success of any project is dependent on the type of contract opted for the contract, along with several other factors such as the most appropriate design, askillful execution team, a good working relationship and mutual trust between the stake holders of the project. The PMBOK guide has classified Contracts into three broad types namely Fixed Price or Lump Sum Contracts, Unit Price or Time and Material Contracts and Cost Reimbursable Contracts. The selection of the Contract type is largely dependent on the client’s adaptability to risks. Among the three types of contracts, Lump Sum Contracts carry the least amount of Risks for the Client. In this type of Contract, the contract value as well as the start and completion dates is fixed before the contract is signed. The builder (Contractor) owns majority of the risks, and will be responsible for completing the works and handing over the project to the owner, on time, fulfilling all stated requirements of the project. In most of the Design-Bid-Build Projects, where the design is fully completed and the scope is clearly defined, Clients most commonly prefer Lump Sum Contracts. Medium sized or Large Lump sum contracts will
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