12 types of engineering contracts

Question 1

What is the difference between a main and sub contract?

Answer 1

main contract between principle and main contractor, subcontract between main contractor and subcontractor

Question 2

What are the 3 common classifications for deciding the type of contract?

Answer 2

1 the method by which the contractor is selected
2 the method by which payment for the work under the contract is evaluated
3 the method by which responsibility for the technical and administrative aspects of the work is allocated

Question 3

What are the 2 routes the principle can use when selecting a contractor?

Answer 3

1 competitive tendering

2 negotiated contract

Question 4

What are the 2 basis used for payment of work?

Answer 4

1 price based

2 cost based

Question 5

What are the 2 methods of price based work payment? and explain

Answer 5

1 lump sum - stipulated price contract- can be increased or decreased if there is change in the work scope
2 measure and value- pre-agreed unit rates, schedule of rates or priced BoQ needed

Question 6

What are the 2 methods of cost based work payment? and explain

Answer 6

1 cost reimbursements - plus a fee

2 target cost- adjusted for any major changes in scope- any profit shared between principle and contractor

Question 7

what are the 4 methods used to evaluate the cost reimbursement fee to contractor?

Answer 7

1 fixed sum
2 fixed sum with profit sharing or bonus
3 fixed fee with sliding- scale adjustment
4 % of costs

Question 8

What are the implications of cost reimbursement payment?

Answer 8

1 allows early contractor involvement with low design level
2 final price depend on risk
3 efficiency of contractor affect cost to promoter
4 low financial charges
5 allow promoter involvement in project management
6 allows contractor to input to design

Question 9

What are the key responsibilities that must be outlined in the contract?

Answer 9

1 project management and coordination 
2 engineering design: conceptual, process, detailed, documentation 
3 procurement and supervision 
4 construction and supply/ installation
5 contract administration

Question 10

What are the different types of contracts?

Answer 10

1 separate design and construction 
2 design and construction 
3 construction supply/ installation 
4 management 
5 construction management 
6 design and management 
7 turnkey

Question 11

What are the implications of separate design and construction contract?

Answer 11

1 widespread use
2 experienced designers can be selected 
3 normally used with measure and value 
4 design usually completed before tender 
5 management divided between parties 
6 can lead to disputes

Question 12

What does the promoter need to do for a design and construction contract?

Answer 12

appoint an engineer to provide scope of project through outline designs, design criteria, performance requirements

Question 13

What is the contractors responsibility in the construction supply/ installation contract?

Answer 13

to carry out the work under the contract in accordance with design, specifications and other details

Question 14

Who is a appointed in a management contract and what do they do?

Answer 14

a management contractor to manage the design, construction phases and contribute to the design itself

Question 15

What are the implications of a management contract?

Answer 15

1 payment of management contractor is by fee, some times plus reimbursable costs
2 promoter pays contractor through management contractor
3 construction usually broken down into small packages with designs complete with high competition tender
4 designers must make more decisions early in design
5 promoter carries more risk- offset by high level of management control
6 some management contractors carry normal construction risks

Question 16

What is a construction management contract?

Answer 16

the contract is directly between contractor and principle

Question 17

What are the differences between a management and construction management contract?

Answer 17

1 construction management firm does not need to e a construction contractor
2 construction contracts have normal risk by promoter
3 construction management firm has no commercial professional conflicts of interest
4 construction manager is treated as a professional service provider + paid fee

Question 18

What is a design and management contract?

Answer 18

they have responsibility for the detailed design

Question 19

What are the similarities of a design and management contract and a management contract?

Answer 19

1 single point of contact for promoter
2 management of design and construction integrated
3 specifications must be defined early in design phase
4 time saved from design/ construction overlaps
5 likelihood of better design buildability

Question 20

What are the contractors responsibilities in a turkey contract?

Answer 20

detailed design, procurement and construction- scope of design provided by separate designer

Question 21

What are points to consider of a turkey contract?

Answer 21

1 payment may be staged lump sums or BoQ
2 full specification needed early in design stage
3 post contract promoters negotiating position is weak
4 pay need to cover cost of design by contractor in tender stage
5 checking the contractors work is likely to lead to disputes
6 promoters commissioning requirements must be in contract

Question 22

What are the requirements for a simple contract?

Answer 22

1 intention 
2 genuine consent 
3 legality of purpose 
4 legal capacity 
5 offer and acceptance
6 valuable consideration

Question 23

Give an example of when a lumpsum price based contract was used

Answer 23

the millennium stadium in wales

Question 24

Give an example of when a target cost based contract was used

Answer 24

The queens ferry crossing

Question 25

Give an example of when earned measure and value based contract was used

Answer 25

for building roads in north Lanarkshire

Question 26

Give an example of when cost reimbursement based contract was used

Answer 26

holyrood parliament