Different Types of Construction Contracts|Lump-Sum Contracts|Measurement Contracts

 

Different Types of Construction Contracts:

1. EPC (Engineering Procurement and Construction)

    In Turnkey or EPC Contract is a Design/Build Contract in which only functional requirements are provided while the contractor is responsible for Designing. Approving the design and drawings and then execution.

2. Lump-Sum Contracts

              In which a fixed amount is paid for all the work performed. It is normally used in the construction industry to reduce design and administrative costs. This is suitable for small projects.

3. Measurement Contracts

Also called “measure-&-value”

•   Item Rate Contract basis (a unit price or schedule contract)

                A contract or work execution is taken on the item rate. BOQ i.e. Bill of quantity is given by Clients. While payment is made by actual work performed.

•  Percentage Rate contracts

    In this type BoQ and the total amount is drawn by Client and contractor is required to offer the lowest rate (in percentage below or higher rate that is percent above than that of actual by client)

•  Rate only contracts

                These contract call for contracts where quantity cannot be defined in advance like boreholes and site investigation etc. The unit of work is rated here and then multiplied by total work is done.

4. Cost-plus contracts

This type of Contract, Contractor is paid for all expenses with an additional some amount as a profit.