Experience Area D - Procurement

Question 1

What are the difference type of Construction Contracts?

Answer 1

1. Traditional
2. Design & Build
3. Construction Management
4. GMP / Guaranteed Maximum Price
5. PFI ( I think this is an English term - need to look up)
6. Partnering
7. Cost-Reimbursement contracts

Question 2

What is a ‘traditional’ construction contract?

Answer 2

The architect (and other consultants) is responsible for the design, documents and observation (other consultants - for their own area). The contractor is responsible for the construction.

This can be lump sum fixed price. All documentation, drawings and specifications are completed by the consultant team and then offered for tender. This price is fixed before commencement of construction.

This can be lump sum fixed price with early contractor involvement. The roles of the project participants are the same as the traditional system, however the main contractor and sometimes key - sub-contractors become part of the project team tasked with developing the design to a point that the main contractor and client sign a fixed priced contract. Managed in the traditional manner.

Question 3

What is a ‘design and build’ construction contract?

Answer 3

This is a system that places responsibility for both the design and construction in the hands of the contractor.

A variant of this is Integrated design with construction / develop and construct. It is based on the early appointment of a contractor in the design/development stage to act in an advisory role by contributing construction expertise during the design process.

Question 4

What is a ‘construction management’ construction contract?

Answer 4

The client is responsible for managing all aspects of the design, tender and construction. During the construction phase the client acts as the main contractor and engages all subcontractors. To assist this process a construction company or construction manager is appointed early on for a fee to manage the construction process. They supervise the trade contractors, and may co-ordinate the work of the design team.

(From the grad group slides - seems slightly vague or incorrect?) The contractor has a management function. The work is divided into packages and these packages are let individually.

Question 5

What is a ‘GMP’ construction contract?

Answer 5

Guaranteed Maximum Price. The contractor agrees that the contract sum will not exceed a specified maximum. If the cost is higher, the contractor bears the additional cost.

Question 6

What is a ‘PFI’ construction contract?

Answer 6

A single integrated supply team is appointed for design, construction and management and then to operate it for a period of time. (need to look into this further - for things like prisons?)

Question 7

What is a ‘partnering’ construction contract?

Answer 7

A collaborative management approach that encourages openness and trust. Commonly used on large, long term or high risk contracts.

Question 8

What is a ‘cost-reimbursement contract’?

Answer 8

A cost-reimbursement contract is a contract where a contractor is paid for all of its allowed expenses to a set limit, plus additional payment to allow for a profit. CRC contrast with a fixed price contract, in which the contractor is paid a negotiated amount regardless of incurred expenses.

Question 9

What elements are included in a construction contract?

Answer 9

1. Specific Schedules
2. General Conditions
3. Letter of Acceptance from client accepting contract price submission from contractor
4. Post tender correspondence and clarifications that effect the tender offer from the contract price submission
5. Tender offer from contractor/ contract price submission
6. NTTs / construction correspondence.