Construction Management
Construction Management
5th Edition
ISBN: 9781119256809
Author: Daniel W. Halpin, Bolivar A. Senior, Gunnar Lucko
Publisher: WILEY
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Question
Chapter 4, Problem 1RQE
To determine

List and explain the two fundamental types of competitively bid construction contracts.

Find the contract type that is mainly used for the construction of piers for supporting large suspension bridge and provide reason for the same.

Expert Solution & Answer
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Explanation of Solution

The two fundamental types of competitive bid construction contract are as follows:

1. Lump sum contract:

In this contract, a proprietor agrees to provide a fixed lump sum amount of money to the contractor for the complete execution of project.

The owner will know about the entire project cost only during the commencement of the project.

This contract type is used in small projects where the scope and responsibility of the owner and contractor are well defined.

2. Unit price contract:

This type of contract depends on the estimation of quantities of items involved in a project and their corresponding unit prices.

The contractor’s overhead and profit are incorporated in the unit price.

The resources involved in the construction project are recognized, but the total quantity of work involved in the project is unknown at the time of contract.

The unit price contract is mainly used for the construction of piers for supporting suspension bridge, as the bridge is supported by multiple units of similar piers and unit price contracts provide flexibility to the contractor to fix the price of unit pier and execute repeated work.

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