The various types of building contracts that can be used in this project include:
Lump sum contract: it is also called fixed price contract. This is where a total fixed price for the whole project is agreed upon between the client and contractor. The contract provides incentives and penalties for early and late completion respectively.
Cost plus contracts: these are types of contracts where the contractor is paid for the actual costs (direct and indirect costs), expenses or purchases incurred directly when undertaking the construction plus a fee to cater for profit. Cost plus contracts include: cost plus fixed fee, cost plus fixed percentage, fixed plus with guaranteed bonus and maximum contract price, and cost plus with guaranteed maximum contract price.
Unit price contract: this is where the price of each unit or quantity of the project is determined then the client pays the cost of the total units or quantities delivered by the contractor (Rodriguez, 2018).
Target cost contract: this is where the contractor is paid the total actual costs plus a predetermined fee that can be either a percentage of total cost or a fixed fee as long as the project cost does not exceed the target cost that was specified by the client (Jain, 2017).
Time & material contract: this is where the client pays for the material and time spent that the contractor spends on the project based on the pay rates agreed upon by the two parties (Riddell, 2017).
The rights and responsibilities of various parties under a contract are as follows:
Some of the responsibilities of the client include: identify needs of the project; define the project parameters and goals; organize for sufficient funds; appoint authorized representatives and consultants; develop reasonable goals and expectations of the project; negotiate the project’s procurement package; arrange when to allow the contractor takeover the site; understand the responsibilities and rights of other parties involved in the project; ensure timely responses to the submissions of the consultant and submittals of the contractor; ensure that progress payments are made on time (Surahyo, 2018).
Some of the rights of the client include: hire or dismiss his representatives; hire independent personnel to supervise ongoing works; refuse some subcontractors from being involved in the project; make changes (either design or financial changes) to the project through adequate consultation with the contractor; carry out audit on how resources are used on site; request for general and special reports from the contractor; access the site at any time; and terminate the contract if there is adequate proof for breach of contract.
The responsibilities of a consultant include: establish the feasibility of the project; prepare conceptual, preliminary and final/detailed design of the project; develop ad appraise alternatives to the design, construction type and location of the project; prepare preliminary cost estimates and budget; prepare an environmental impact assessment; prepare contract documents; help in obtaining necessary approvals and permits; prepare procurement or bid documents; oversee construction process; advice the client during construction stage; monitor the technical performance, cost and schedule of the contractor; ensure that works performed by the contractor meets the specifications in the contract documents; issue instructions and information to the client; ensure that the contractor complies with the necessary health and safety regulations; help resolve disputes between the client and contractor; liaise with the contractor and other relevant authorities to ensure smooth running of the project; review and approve submittals of the contractor; review and assess claims of the contractor; verify measurements of work completed by the contractor; and ensure that all relevant documents are maintained properly.
The rights of the consultant are: reject claims made by the contractor; reject application made by the contractor about substantial completion or performance of work; make judgment on an issue after consulting parties involved; and resolve conflicts impartially and without any bias.
Responsibilities of the contractor include: provide the necessary equipment, material and labour for the project; provide experienced and competent personnel to manage and supervise the project; ensure that all necessary statutory regulations are met when executing the works; ensue that quality systems are implemented; ensure that all works are done in a safe environment; guarantee that all works will be done in accordance with the contract documents; discharge duties diligently and with integrity; avoid conflicts; and avoid injuring the reputation of other parties (Stiegler & Elkins, (n.d.)).
Rights of the contractor include: be in total control of the ongoing work on site; prepare and submit payment claims; prepare and submit breach of contract claims; update other parties periodically about the progress of the project; discuss with the client about proposed changes; suspend or terminate the contract under certain circumstances such as breach of contract by the client or consultant.
They are responsible for issuing the required approvals and permits, and inspecting the project to ensure that it meets the necessary standards.
Some rights of government authorities include: conduct independent audits of ongoing work; and suspend works due to negligence or failure to comply with relevant statutory regulations and laws;
Some of the circumstances that can cause breach of contract are: failure or delay by one of the parties to a contract to accomplish their responsibilities as expected or agreed in the contract due to reasons such as lack of funds (failure to make payments on time) employing inexperienced or unqualified staff, lack of the required plant/equipment, miscommunication, lack of materials, misunderstanding or misinterpretation of information, lack of adequate information, internal or external pressure, disputes and conflicts, unprofessionalism, greediness for higher profits, unforeseen risks or conditions (such as natural events or disasters), unwillingness of one party to accept its obligations and continue with the work, removing plant/equipment from the site, leaving the site, subcontracting work against the contractual agreement with the client, denying access to the site, failure to rectify or remove defective works, failure by the contractor to provide continued update about ongoing works. It is very important to understand these causes so as to find ways of preventing damages in case a contract is breaches either voluntarily or otherwise (Ganglmair, 2017); (van Kogelenberg, 2014).
Ganglmair, B., 2017. Efficient Material Breach of Contract. The Journal of Law, Economics, and Organization, 33(3), pp. 507-540.
Jain, V., 2017. Types of Construction Contracts and their Comparison. [Online] mAvailable at: https://theconstructor.org/construction/types-of-construction-contracts-comparison/14268/ [Accessed 26 November 2018].
Riddell, T., 2017. Types of Construction Contracts. [Online] Available at: https://esub.com/4-types-construction-contracts/ [Accessed 26 November 2018].
Rodriguez, J., 2018. 4 Common Types of Construction Contracts. [Online] Available at: https://www.thebalancesmb.com/common-types-of-construction-contracts-844483 [Accessed 26 November 2018].
Stiegler, S. & Elkins, V., (n.d.). Parties to a Construction Contract. [Online] Available at: https://globalarbitrationreview.com/chapter/1145207/parties-to-a-construction-contract [Accessed 26 November 2018].
Surahyo, A., 2018. Understanding Construction Contracts, New York City: Springer nternational Publishing .
van Kogelenberg, M., 2014. Deliberate Breach of Contract and Consequences for Remedies: Exploration of a Neglected Area in the Law of Contract. Maastricht Journal of European and Comparative Law, 21(1), pp. 141-161
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