What are The TYPES OF CONSTRUCTION CONTRACT

TYPES OF CONSTRUCTION CONTRACT

In Construction Industry, the following eight contract types are so far practiced:
1. Lump Sum Contract,
2. Bill of Quantities or Unit Rate Contract,
3. Cost Plus Fixed Fee Contract,
4. Cost Plus Percentage of Cost Contract,
5. Item Rate or Schedule of Rates Contract,
6. Labor Contract,
7. Hybrid Contract, and Special Contract

1 Lump Sum Contract:

When the Project or Tender price is determined and quoted as a
total sum of money without individual ratings to execute the whole of the works and / or
services according to the drawings and specifications, it is called a Lump Sum
Contract. In such contracts: It is difficult to administer changes and
amendments but experiences of similar projects are used as a basis to this effect,
Works or services are checked based on the specifications, the conditions of contract or
terms of reference and drawings if any for acceptance and closing of accounts, and
Payments are agreed at different stages of works or services.
A Lump Sum Contract is more suitable for works of smaller in size and where the
contracting parties have prior experience of similar projects. But it is not advisable for
projects with considerable uncertainties such as; difficult sub surface situation, unusual projects, maintenance projects, etc. A Lump Sum Contract mainly includes Contract Agreement, Conditions of Contract, Drawings and Technical Specifications.

2 Bill of Quantities Contract:

When the Project or Tender price is determined and quoted
from unit rates assigned to detailed bill of quantities, it is called a Bill of Quantity
Contract. The Bill of Quantity includes short description of specifications, unit of
measurement, quantities and columns for pricing the unit rate and its total amounts. In
such contracts: It is relatively easy to administer changes and amendments because actual and assigned
quantities can be compared, Works or service

3. Cost Plus Fixed Fee Contract,

A cost-plus-fixed-fee contract is a cost-reimbursement contract that provides for payment to the contractor of a negotiated fee that is fixed at the inception of the contract . The fixed fee does not vary with actual cost, but may be adjusted as a result of changes in the work to be performed under the contract .

4. Cost Plus Percentage of Cost Contract,

Cost-plus percentage of cost is a method contractors often use to price services. This type of contract specifies that the buyer must pay all the project costs incurred by the seller, plus an additional amount for profit.

5. Item Rate or Schedule of Rates Contract,

Schedule of Rates means any schedule included in the Contract which, in respect of any section or item of the Services to be carried out, shows the respective rate (Fee) of payment for performance of that service and which may also include lump sums, other sums, quantities and prices

6. Labor Contract,

A labor contract is a legal agreement that establishes the rules that govern the relationship between an employer and employee. Also known as a labor agreement, a labor contract is a binding legal agreement that establishes the rules and regulations that will govern the relationship between an employer and an employee

7. Hybrid Contract, and Special Contract

Hybrid construction contracts are those that include both construction operations covered by the Housing Grants, Construction and Regeneration Act 1996 (the Act) and non-construction operations

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