Techshore Institute Blogs about Best Technical and Management Courses: TECHSHORE INSPECTION SERVICES : Contracts

Contracts

It is basically an agreement enforceable by law where a proposal is made by one party and its acceptance by the other.

Essentials of contract

Ø Parties competent to contract

Ø Free consent of the parties

Ø Definite proposal and its acceptance

Ø The considerations or objects are lawful

Ø Meaning shall be certain

Types of contract

Ø Lump sum contract

Ø Item rate contract or schedule contract

Ø Lump sum and scheduled contract

Ø Cost plus fixed fee contract

Ø Cost plus percentage of cost contract

Ø Special contracts

Lump sum contract

Ø Owner agrees to pay a contractor a lump sum amount after the completion of work without a cost breakdown.

Ø After work no detailed measurements is required.

Item rate contract

Ø Contractor is required to quote a definite rate for each item of work.

Ø This type of contract is usually done in Railway and Public Work Departments.

Ø It allows a thorough rate analysis.

Lump sum and scheduled contract

Lump sum contract that requires a cost breakdown.

Cost plus fixed fee contract

The owner pays the contractor an agreed amount over and above the documented cost of work.

Cost plus percentage of cost contract

In cost plus percentage system, the owner pays greater than 100 percent of the documented cost, usually requiring detailed expense accounting.

Quotation

Rate quoted by contractor in response to tender is known as quotation

Tenders

It is defined as an offer in writing to execute a specified work .

Tender documents may include:

· Letter of invitation

· Form of contract, contract conditions, and amendments

· Drawing schedule, Design drawings, specifications

Earnest money

Guarantee in the form of money, given by contractor along with their tenders
It confirms their willingness to work for the department.
If the tender of the contractor is not accepted then money is refunded immediately.

Security deposit

It is the money which the contractor has to deposit when the contract is allotted to him.
It is usually taken as10% of the total estimate.
Money also includes earnest money already deposited by the contractor.
Deposit is kept as a check so that the conditions of contract not violated.

Retention money

Percentage (often 5% or 10%) of the amount certified as due to contractor on interim certificate.
Deducted from each interim certificate and retained by client
Purpose: ensure that contractor properly completes the activities
Half the amount release after practical completion and remainder after defects liability period.

Work order

Letter issued to contractor to take up the work.
Order of commencement for a work.
Date of completion is treated as the date of issue of this letter.

Liquidated damages

In building contracts liquidated damage refer to contractor failing to achieve practical completion of work within stipulated period.
They are not penalties.
Predetermined damages calculated based on actual loss if work is delayed.

Compensation for delay in completion

Compensation paid by contractor for work delay
Fixed by competent authority
Limit: Up to full amount of security deposit

Techshore Institute Blogs about Best Technical and Management Courses

Thursday, December 22, 2016

TECHSHORE INSPECTION SERVICES : Contracts

No comments:

Post a Comment

Top Logistics Courses in Kerala for a Bright Future

Search This Blog