2. Contracts are agreements in which a person or business agrees
to specific terms and conditions that can be legally enforced. In a
contract, responsibilities and obligations are outlined and agreed
upon by the two parties involved.
WHAT IS A CONTRACT?
The Contract is an undertaking or agreement by a person or
firm to do any construction work or activity under certain
terms and conditions. These terms are used in Conditions of
Contract in Construction.
3. Four Functions of Engineering Contracts
Engineering contracts cover four particular issues of an agreement
between an engineer and the company they are going to work on a
project for.
These functions are:
1. Scope of work
2. Period of performance
3. Payment
4. Termination
4. 1.Scope of Work
The first purpose of the contract is that it clearly lays out what is
expected of the contracted engineer. To be completely clear, the
company proposing the work should outline each task that is part
of the project and provide deadlines. They should also be clear
about their vision for the project and the end goal. Any parts of the
project that should not be handled by the contracted engineer
should be clearly stated in the contract.
5. 2.Period of Performance
Engineering contracts should give the expected time
frame for the project and a deadline for total
completion. Companies usually provide payment for the
project at its beginning, so it is especially important to
set deadlines in a contract.
6. 3.Payment
Contracts make sure that products and services are paid for in
a timely manner. An engineering contract should outline when
payments will be received, from whom, and how much, as well
as instructions for invoicing. Some projects with a longer time
span will be paid in installments at preset milestones in the
progress of the project. If this is the case, the contract should
lay out these milestones and payment amounts.
7. Convenience issues that prevent project progress or completion
Natural disasters
4.Termination
Engineering contracts usually contain termination clauses. These
types of clauses specify how, and for what reasons, the contractor
or customer can terminate the agreement.
Valid reasons for termination include:
8. The following are the various types of contracts,for execution
of civil engineering works:
1. Item rate contract
2. Percentage rate contract
3. Lumpsum contract
4. Labour contract
5. Materials supply contract
6. Piece-Work agreement
7. Cost plus percentage rate contract
8. Cost plus fixed fee contract
9. Cost plus fluctuating fee contract
10.Target contract
9. 1. Item rate contract:
For this contract, contractors are required to quote rates for individual items of
work on the basis of schedule of quantities furnished by the client's department.
2. Percentage rate contract:
In this form of contract, the client's department draws up the schedule of items
according to the description of items sanctioned in the estimate with quantities,
rates, units and amounts shown therein.
3. Lump sum contract:
In this form of contract, contractors are required to quote a fixed sum (lumpsum
amount) for execution of a work complete in all respects i.e., according to the
drawings, design and specifications supplied to them with the tender within the
specified time.
10. 4. Labour contract:
This is a contract where the contractor quotes rates for the item work
exclusive of the elements of materials which are supplied by the client's
Department.
5. Materials supply contract:
In this form of contract, the contractors have to offer their rates for supply
of the required quantity of materials , inclusive of all local taxes, carriage
and delivery charges of materials to the specified site within the time fixed
in the tender.
6.Piece-Work agreement:
As the name signifies the piece-work agreement, it is that for which only a
rate is agreed upon without reference to the total quantity of work to be
done or the quantity of work to be done within a given period.
11. 7.Cost plus percentage rate contract:
In tendering for work on a “Cost Plus" basis, the contractor is paid the actual
cost of the work, plus an agreed percentage in addition, to allow for profit.
8.Cost plus fixed fee contract:
In this type of contract, the contractor is paid by the owner an agreed lump-
sum amount over and above the actual cost of work.
9.Cost plus Fluctuating Fee contract:
In this type of contract, the contractor is paid by the owner the actual cost of
construction plus an amount of fee inversely variable according to the
increase or decrease of the estimated cost agreed first by both the parties.
12. 10.Target Contract:
This is the type of contract where the contractor is paid on a cost-plus
percentage work performed under this contract. In addition, he receives a
percentage plus or minus on savings or excess effected against either a
prior agreed estimate of total cost or a target value arrived at by
measuring the work on completion and valuing at prior agreed rates.
13. Conditions of Contract in Construction
Following are the some important terms and conditions of contract in
construction,
1. Security Deposit
On acceptance of the tender, the contractor has to deposit 10% of the
amount as security money with the department which is inclusive of the
earnest money already deposited.
This amount is kept as a check so that the contractor fulfills all terms and
conditions of the contract and carries out the work satisfactorily
according to the specifications and maintains the progress of the work,
and completes the work in time.
14. 2. Compensation for Delay
There is a provision of compensation for delay in conditions of contract in
construction. The time allowed for completion of the work in the essence of the
contract on the pall of the contractor.
When the work allotted to the contractor remains un-commenced or there is a
delay in completion of the work or if the progress of the work is not
proportionate to the time escaped, then the contractor shall pay as
compensation an amount equal to 1% or such a small amount as the
superintending of delay engineer may decide for each day of delay subject t to
the maximum of 10% of the tendered amount of the whole work.
15. 3. Extension in Time Limit
These conditions of contract in construction is intended to indicate the
circumstances under which an extension of the time limit may be granted
to the site contractor by the owner.
4. Completion Certificate
On completion of the work including removal of surplus materials or any
other materials in connection with the work, the contractor shall be
furnished with a completion certificate by the engineer-in-charge. The
date of completion shall be noted in the measurement book according to
the date as certified in the certificate.
16. 5. Payment on Certificate
The contractor shall be entitled to receive monthly payment on bills
submitted by him to cost more than Rs. 5000(Indian Rupee) or 3369.31 in
Philippine Peso and duly approved and passed by the engineer in – charge,
whose certificate of the sum shall be final and conclusive. But all such
intermediate payment shall be regarded as an ance against the final
payment and not as payment for work actually done.
6. Work at Night and Holidays
There are conditions of contract in construction that No Work shall be done
at night, on Sundays, and another holiday without the written permission of
the engineer in charge.
17. 7. Inferior Materials and Workmanship
This clause is provided to reject the materials and workmanship which are
not conforming with the specifications of the work.
This conditions of contract in construction may be written as:
All materials and workmanship which in the opinion of the engineer in charge
are not conforming to the provisions made the specifications of the works
shall be
All rejected materials shall be suitably marked on the site and shall be
removed to a suitable distance at once her the contractor on demand from
an engineer. All
Condemned workmanship shall be rectified repaired or replaced by the
contractor for the satisfaction of the engineer in charge.
18. 8. Departmental Materials
When departmental materials are issued to a contractor from time to time for
the purpose of the contract only at a fixed issue rate as provided in the tender.
The value of the full quantity of materials supplied may be deducted from sums
then due or thereafter to become due to the contractor under the contract or
from the security deposit.
9. Extra Items and Its Payments
The engineer-in-charge shall decide and fix the rate of the extra items by
comparing and studying the rates of suitable items mentioned in the
contractor’s tender or by the actual process of rate analysis. No extension of the
time limit shall be granted due to the execution of the extra items unless the
same is recommended by- the engineer-in-charge.
19. 10. Measurement and Payment to Contractor
The measurements of all the Items under this contract shall be Liken by the
Engineer-in-charge or his representative as per standard practice in
accordance with the standard model of measurement of building works (IS
1200).
The contractor shall submit a bill on the printed form on or before the
twentieth (20th) of each month of work executed in the previous month. The
bill of work shall be prepared as per the rates specified in the tender.
If the contractor has submitted a bill for payment as above, the engineers-in-
charge shall, not later than the first month, issue a certificate for payment to
the contractor.
20. 11. Commencement of Work According to Drawing and Specifications
All works shall be carried out in accordance with the design, drawings, and
specifications, and all materials in every respect shall are in strict accordance
with the specifications. The contractor shall be entitled to have access for the
purpose of inspection during office hours of all such drawings and
specifications and all of such design, drawings as aforesaid.
12. Additions and Alterations
The engineer-in-charge reserves then right to make any charge in, omission
from, any additions or alterations for, the original designs. Drawings,
specifications instructions are necessary for the opinion of the engineer-in-
charge during the progress of the work and which may be given to him in
writing and signed by the engineer-in-charge.
21. Written permission to appoint sub-contractors to be obtained from the owner.
The main contractor to be considered responsible for the works as a whole.
13. Subletting
In order to guard against the behavior of the sub-contractors appointed by the
main contractor, this clause is included in the conditions of contract in
construction.
The clause should provide for two important points,
14. Breach of Contract
In case a contractor fails to carry out work with contractual obligations, the owner
must have the right to claim damages for breach of contract. However such
damages will not always be an adequate remedy and provision must be made in
order to get the work completed.
In case of abandonment of the work owing to bankruptcy or liquidation, serious
illness or death of the contractor, or any other cause, the owner shall have the
power to adopt any of the following courses as he may deem best suited to his
interests
22. 15. Labour Laws
It is agreed by the contractor that he shall have to respect the provision
of the labour laws Which are in force from time to time and the contractor
shall be responsible for all claims, compensations, etc, occurring under
the provision of such labour laws.
the works on behalf of the Architect and the contractor is supposed to
give him full co-operation and assistance to perform his duty well.
19. Compensation in Case of Bad Work
If any work is found to have been executed by the contractor with
unsound, imperfect, or unskillful workmanship or with inferior materials, or
it Is not in accordance with the contract, the contractor shall make good
the defects in work at his own expenses and remove the materials or
articles complained in writing by the Engineer-in-charge.
23. 20. Maintenance Period
The contractor shall be responsible for any damage or any defects noticed
within the prescribed maintenance period of 3 months (6 months in case of
road work). The work shall as soon as practicable after the expiration of the
maintenance period be handed over to the engineer-in-charge in good and
perfect condition.
if any damages, defects, imperfections become apparent in it from the
armed date of commencement until the end of the maintenance period, the
contractor shall make good same at his own expenses, or in default, the
engineer in charge shall be entitled to carry out such work by other
workmen and deduct the expense from any sums that be due to the
contractor or from his security deposit.
