Essay Contracts

1128 Words 5 Pages
TERMS OF AGREEMENT

Contracts should be drafted to ensure that specific topics are addressed. A construction contract should identify the contractor, the owner, and the designer. The scope of work for which the contract is being drawn should also be defined. The project may be defined in a descriptive fashion, along with specific reference to documents such as the construction drawings and specifications.

The contract may stipulate that the construction project must be completed by a given date or within a given number of days of the notice to proceed. Failure to complete the project with stipulated time may result in liquidated damages charged against the contractor.

The contract will state how payments are to be made to the
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Payment for work done is a simple matter. The contractor and the owner need simply agree on the validity of the various cost reimbursements that are requested. It is imperative that the contracts clarify which costs will be reimbursed.

These contracts are used when the actual cost of a project or portions of a project are difficult to estimate with accuracy. This may occur when the plans are not complete or when the project cannot be accurately portrayed. It also may occur when a project is to be completed with a fairly short time period and the plans and specifications cannot be completed before construction starts.

A cost plus contract, unlike the other forms of contract, does not place the owner and the contractor in an adversarial relationship. However, this form mandates that the contractor be trustworthy.

The reason why we did not use this type of contract is that the owner has little idea of what the actual cost of the project will be. Also, the owner must maintain additional staff to monitor the progress of the contractor. The importance of the staff will be primarily on costs. Besides this contract is based on a fast tracking construction. Project that are not well designed or those which may be subjected to numerous changes during the construction phase, will be affect by this contract.

LUMP SUM CONTRACT

The lump sum

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