Project contracts, Project Management

Assignment Help:

Understanding Project Contracts 

Project contracts invariably involve construction and therefore we will discuss contracts necessarily involving construction in this section. In addition to construction, other areas of work like design, engineering and procurement are involved in project contracts, but all these up front areas of work have to be followed by construction and subsequent commissioning of the project. In this section we will discuss about contracts combining some or all of these areas. 

A construction contract between Principal and Contractor can be formed by: 

  •   Negotiation. 
  •   Competitive tendering. 
  •   Combination of both. 

Mode 1  contract is formed by direct negotiation by the principal with one contractor. This mode is adopted only when work is very urgent, or when the principal believes that only one contractor is capable of building the project, or when the principal believes that time and money spent on tendering is wasteful. This  is practically non existent in government contracts, but can occur, although rarely, in private industry.  

Mode 2 competitive tendering is inviting for bids from several contractor to extract the best performance from the contractors. Competitive tendering exists invariably in public contracting. 

Mode 3  is an approach to negotiate with two or three bidders for securing the best possible price. When this is a post-bid negotiation, there is a danger that the lowest price bid agreed in the contract may not be realised on account of the contractor as he may have been coerced to accept a low price for getting the contract. The danger is that the cost risk gets transferred either to the principal through claims under the contract or to subcontractors.

Whatever be the mode of contracting adopted, we will now discuss contracts from the viewpoint of the scope of design and construction. When the two areas of work that is, design and construction is involved in a project, a third dimension of work viz. coordination necessarily arises. This combination means that the project manager must thoroughly understand the contracting strategies that can be adopted to ensure the ultimate achievement of the project deliverables. 

There are two broad methodologies in this section viz D-B-B (Design, Bid, Build) and D-B (Design and Build).  


Related Discussions:- Project contracts

Graphs, G raphs The purpose of graphs is to organise, summarise and di...

G raphs The purpose of graphs is to organise, summarise and display data. The different types of graphs are line graphs, bar graphs, and circle graphs. The steps involved in p

Explain about the term hygiene factors, Explain about the term Hygiene Fact...

Explain about the term Hygiene Factors. Hygiene Factors: Maslow’s require Hierarchy Theory upon Motivation has been modified through Fredrick Herzberg and his relates. Th

Project, can make two project for me?

can make two project for me?

Explain about the human relations skill, Explain about the Human Relations ...

Explain about the Human Relations skill. Human Relations skill refers to the capability to work effectively along with others and build cooperative work groups to attain organi

Project management structure, what are the segments involved in project man...

what are the segments involved in project management structure?

Process selection - tqm, Once the process capabilities of available proc...

Once the process capabilities of available processes are known the process selection is then just a question of matching the process capability with the tolerance specified

How much time should planning take, Q. How much time should planning take? ...

Q. How much time should planning take? T imes taken for individual projects differ considerably frequently due to circumstances beyond the project manager's control such as ch

Explain the different methods for monitoring the project, Question: (a)...

Question: (a) The purpose of Project Monitoring and Control is to evaluate and provide an understanding of the evolution and progress of a project. This enables measurement of

International bussies, VK Ltd a multi-product Company, furnishes you the fo...

VK Ltd a multi-product Company, furnishes you the following data relating to the year 2000. First Half of the year Second Half of the year Sales Rs. 45,000 Rs. 50,000 Total Cost Rs

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd