Lecture Flashcards
Contractor may bid or negotiate to do the work on the basis of being paid for the cost as they arise, in addition to being paid a fee
Cost-plus-fee Contract
TYPES OF CONSTRUCTION CONTRACTS
Unit price
Maximum Cost
Lump Sum
Cost-plus-fee
A legal claim against property that has been improved
Mechanics Lien
A security interest in the title to the benefit of those who supplied labor or materials that improve the property
Mechanics lien
Cost that cannot be allocated to specific projects (operating Overhead)
Indirect Cost
Combines financial certainty of lump sum contracts and flexibility of cost-plus-fee contracts
Maximum Cost Contract
Rights created by the mechanics lien
- Right to claim a lien
2. Right to be paid
Percentage of money paid by the owner to the contractor and held in trust
Retention
Advantage of Unit Price Contracts?
Permits adjustment (additional or deletion ) to be made in contracts
Disadvantages of Unit Price Contracts
- Difficult to describe the work to be done
- Difficult to measure actual quantities of work
- Difficult to get lowest bid
It is a type of contract which the designer, consultant or contractor determines the quantity of work
Unit price contract
Arises out of the fact of doing construction work
Increases with growing output
Direct cost
Advantages of maximum cost contract
Provides motivation for the contractor to keep the cost down while increasing profit margin
Bids like lump sum contract; two sums is stated. Maximum cost and fee
Maximum Cost Contract
The highest amount of money required to complete the project
Maximum Cost
Return to entrepreneurs for taking risks
Profit
Cost that cannot be allocated to specific items (job overhead)
- field supevision
- mark-up
- bonds and insurance
Direct Cost
Cost incurred for specific items of work
- job-site labor
- temporary and permanent materials
- equipment Cost
Direct cost
Arises out of the fact of construction work being business
May change if output changes,but not direct proportions
Indirect cost
Serves as means if pricing construction projects
Construction Contract
Construction cost
Direct cost and Indirect Cost
The party who contracts with the owner to provide construction management services
Construction manager
Parties who supplies materials, equipment, etc to build a project
Suppliers
The party who contracts with the owner to construct the project or to do specific tasks as requested by the owner
Contractor
calculated as percent of fixed sum or percent of final cost
Fee
Contract with direct consultant
Indirect consulant
Contract directly to the designer
Direct consulatant
The party retained by the designer to resolve particular problems of design in portions of the total project, or provide highly specialized service
Consultant
The party retained by the owner to design the project as contemplated by the owner
Designer
Amount of money the contractor requires to cover operating overhead and profit
Fee
The party who owns the land, has the right to land, and who presumably has the means to develop the land
Owner/client
What are the means of providing security of a contractor?
Bid bond and performance bond
What are the means of providing security of the owner?
Rights to land
An arrangement whereby the project proponent undertakes the financing and construction of an infrastructure facility
Leases the facility to the government for a fixed period to recover investment
Build-Lease-Transfer
Government-funded projects
Public Construction Projects
Most common financing scheme for government projects since most infrastructures can be used by the paying public
Build-Operate-Transfer
Types of construction projects
Public and Private construction Projects
Common government-funded project
Roads/bridges/railroads Airports and hangers Portworks/river and shore improvement Tunnels Irrigation/drainage/water supply/sewerage Buildings
Finances the project
Owner
In-charge with the overall coordination of kf the entire construction program
Project manager
Parties to a construction contract
- Owner
- Designer
- Consultant
- Contractor
- Construction managers
- Employees
- Suppliers
- Other parties
Participants of Construction Projects
Design professionals
Construction Professionals
Owner
Project Manager