Lecture 2 - Types of Contracts in Construction Industry

Question 1

Traditionally, the _____ commissions a design.

Answer 1

employer

Question 2

The _____ then is required to build in accordance with the design prepared by the employer.

Answer 2

contractor

Question 3

Under such a contract, the contractor’s responsibility is only to _______

Answer 3

construct in accordance with the design.

Question 4

If there is a failure of the structure eventually, as long as the contractor has constructed in accordance with the design, then liability falls on the______

Answer 4

designer.

Question 5

This method is well-proven and long-established in the industry.

Answer 5

The Traditional Contract

Question 6

COMPENSATION TO CONTRACTOR

Answer 6

a. ) Lump – Sum Contracts
b. ) Measure and Value Contracts
c. ) Cost Plus Contracts

Question 7

the price for the entire scope of works are fixed.

Answer 7

lump sum contract

Question 8

Lump sum contracts may come with ______, in which case the lump sum represents the total set out in the _____

Answer 8

Bills of Quantities

Question 9

Alternatively, the _____ may be based on drawings only. In that case, the contractor has to estimate the quantities involved in order to quote a _____.

Answer 9

lump sum

Question 10

Usually, the price of a lump sum contract cannot be varied due to any fluctuations of costs, currency, etc. unless there is a ____________

Answer 10

valid variation order

Question 11

Lump sum contracts are good for employers,________

Answer 11

where the scope of work can be reasonably ascertained up-front.

Question 12

A ________ would determine the rates for works to be carried out, or for supplies.

Answer 12

measure and value contract

Question 13

This would usually be set out either in an approximate BQ or in a schedule of prices/rates.

Answer 13

measure and value contract

Question 14

Final amount to be paid would depend on the actual quantity of works carried out or supplies made.

Answer 14

measure and value contract

Question 15

measure and value contract are good for ___________

Answer 15

contractors, who will be remunerated based on the actual quantum of work carried out.

Question 16

In a ______ , the contractor receives reimbursement of his actual cost plus a top-up to cover his profit.

Answer 16

cost plus contract

Question 17

Cost plus contracts are good for:

Answer 17

Employers, if they can ensure the costs are fair.

- Contractors, especially in an uncertain environment with fluctuating costs and currencies.

Question 18

__________ is one where the contractor undertakes both design work as well as the work of construction for the contract.

Answer 18

design and build contract

Question 19

design and build contractis advantageous for

Answer 19

employers who get a complete design, full scope of works and stipulated price from the outset.

Question 20

A variant of the design and build contract is the_______

Answer 20

turnkey contract.

Question 21

In a ______, the contractor does not only carry out design and construct obligations.

Answer 21

turnkey contract.

Question 22

( turnkey contract.) The contractor is also responsible for

Answer 22

• Financing
• Approvals
• Procurement
• Fitting out
• Intellectual property issues (transfer of technology).

Question 23

It is also becoming increasingly common for parties to enter into _______instead of building contracts.

Answer 23

MANAGEMENT CONTRACTS

Question 24

In a _______, the contracted manager’s role is to ensure the implementation of the contract is carried out effectively.

Answer 24

management contract

Question 25

The ______ gets involved early in the process, as opposed to the building contractor who is engaged later when the project is ready to be constructed.

Answer 25

contracted manager

Question 26

It may well be that the “______” is a related company of the “______” eventually.

Answer 26

manager—-contractor

Question 27

A______usually happens for public infrastructure works.

Answer 27

BUILT-OPERATED-TRANSFER (BOT) CONTRACTS

Question 28

In a_______, the private company builds, and operates a concession on the infrastructure built for an agreed period of time before transferring the infrastructure to the Government.

Answer 28

BUILT-OPERATED-TRANSFER (BOT) CONTRACTS

Question 29

Ideally, a _______ would be a good mechanism for the private sector to fund infrastructure projects.

Answer 29

BUILT-OPERATED-TRANSFER (BOT) CONTRACTS

Question 30

There are parties in the construction industry who are involved in supplying materials only, and do not participate in any actual construction.

Answer 30

SUPPLY CONTRACTS

Question 31

For such contracts, the liability of the contractor is limited to supplying materials that meet the specifications.

Answer 31

SUPPLY CONTRACTS

Question 32

It is important when dealing with supply contracts that proper tests are carried out before accepting the materials supplied.

Answer 32

SUPPLY CONTRACTS

Question 33

For maintenance, __________ would be a common practice, whereby a contractor is required to maintain a certain facility for a pre-agreed term at a pre-agreed price

Answer 33

term contracts