CPCCBC4003A Assessment Answers Select And Prepare A Construction Contract

Answer 1

Lump Sum contract:

A lump sum contract is one in which the contractor promises to do a certain task for a specified fee. In a lump sum contract, the building owner provides a single fee for the quantity and kind of work to be performed by a contractor (Ross and Williams, 2012). The customer also specifies a deadline for completion. The customer pays once the assignment or phase of building is finished.

Lump sum subject to rise and fall

If the payment connected with the project is liable to increase and fall as a result of the risk involved with the various phases of construction, the contract may be referred to as a lump sum contract.

Cost plus a percentage

When a contractor is paid an agreed-upon proportion of the project’s overall cost, the contract is referred to as a cost-plus-a-percentage contract (Lester, 2007). Paying the contractor above and above what it costs may be considered pure profit by the contractor and is often used to cover additional expenditures like overhead charge, payments to clerical, phone bills, and administrative personnel or premiums for insurances. The contractor can accept this money as a pure profit.

Project management

Professional contract managers oversee all of the contract-related activities and provide guidance to clients on how to choose the best contract to meet their objectives. This is called project management in the contracting industry (Lester, 2007).

Schedule of rates

In a schedule of rate contract, the customer creates the schedule of work to be done without regard to quantity. The contractor is allowed to propose varied pricing for labour equipment and materials, involved with the project (Ross and Williams, 2012).

Sub-contract

The subcontract is the contract between the principal contractor and the subcontractor. It is a legal document that specifies the sort of work to be performed by the contractor.

Answer 2

Variation

The word variation refers to modifications made to the scope of work specified in a building contract.

Prime cost items

The prime cost item is the provision linked with the contract so that other vital goods not included in the contract like door knobs, taps, and window components (Chappell, 2008).

Provisional sum

As defined in the contract, a provisional amount covers the cost of any extra work required to complete the project but whose specifics are not included in the contract, such as work connected to connecting pieces and connections (Turner, 2014).

Extension of time

Specific contracts allow for the extension of project completion time if certain requirements are met and the contractor’s fault is not involved. This term reflects towards specific time period for which the project is prolonged.

Liquidated damages

Liquidity damages are the sums of money specified in the contract that must be paid by the party that violated the contract’s terms and conditions to the party who experienced losses as a result of the breach (Klee, 2018).

Possession of the site

The terms “possession of the site” are often placed in the contract to indicate the contractor’s authority to access the construction site and carry out construction operations (Turner, 2014).

Cooling off period

The cooling off period is the time period specified in the contract during which the customer has the right to terminate the deal.

Defects liability period

The defects liability period is the time period specified in the contract during which the customer has the right to report any problems in the contractor’s work. The faulty liability term is usually six to twelve months (Turner, 2014).

Retention

The retention period is the time period required by law for the project owner to keep project-related documents before disposing of them (Klee, 2018).

Progress claims

The progress claim is the amount of money claimed by the contractor after a given work is done. The numerous works for which claims are commonly made are specified in the progress claim paperwork (Chappell, 2008). The claim papers also include information on the time frame for recovering the money, the due date for payment, and the method used by the contractor to compute the amount claimed.

Answer 3

Followings are five essential features related to building contract that are below presented:

1. i) Payment: A construction contract’s payment terms are one of its primary aspects. The payments include the proper assessment of the entire building construction cost and the payment mechanism for a given project.
2. ii) Scope of the services: The contract must clearly define the scope of the project’s services. The project’s terms and conditions are based on the extent of the project’s services. The contract must explicitly state the scope of work required by the construction contractor (Turner, 2014).

iii) Guarantee of Workmanship: The workmanship guarantee refers to the work guarantee offered in writing by the contractor and correctly documented in the contract. The workmanship guarantee applies to both the services and the equipment delivered by the contractor and is only valid for the time period specified in the contract.

1. iv) Liquidity Damage clause: The construction contract’s liquidity damage provision is crucial. Liquidity damages are the sums of money specified in the contract that must be paid to the other party who has experienced losses as a result of the contract’s terms and conditions being violated by the party that violated them.
2. v) Site location: Having a clear understanding of the location and description of the site is critical to the creation of the contract and to determining its terms and conditions..” Prior to the commencement of building at the site, it is critical that this data be gathered (Turner, 2014).

Answer 4

1. a) The following are the three most likely reasons of the client’s violation of contract, which might lead to contract termination:
2. The client’s ability to pay for the services they’ve had done.
3. Delegating a job to a subcontractor without the prior approval of the primary contractor (Hughes, Champion and Murdoch, 2007).
4. Insufficient access to the job site to allow the contractor to do their duties.
5. b) As a consequence of my violation of contract, the contract may be terminated. The following are the three most likely reasons for this:
6. Non-compliance with the contract’s stated scope of the task.
7. Repeated requests from the customer to fix the problems have gone unanswered.
8. The customer has the right to terminate the contract if the vendor is unable or unwilling to meet the deadline, resulting in the customer suffering financial harm (Hughes, Champion and Murdoch, 2007).

Answer 5

Following is an illustration of the several papers that are an integral element of the contract:

Drawing: A drawing is a visual depiction of what will be built under the contract. Building structure drawings also indicate where a specific building structure is located in relation to the overall building.

Specifications: These are the papers that describe the specifics of the work to be performed under the contract. Documents containing specifications include all of the regulations and standards that must be adhered to throughout the constructing of the constructions (Uher, Uher and Davenport, 2009).

Agreement: As part of the agreement, all parties must agree on which papers should be included in the building contract. The contract agreements provide information on the construction timeframe and payment plan for the contractor’s work on the project.

Conditions: It is the contract’s terms that outline the legal rights of both parties. In the event of a disagreement between the customer and the contractor, these papers outline the various steps that must be taken. Various insurance, safety, termination, and jurisdictional terms are included in the condition papers, as are other provisions (Uher, Uher and Davenport, 2009).

References

Chappell, D. 2008. Standard Letters for Building Contractors. John Wiley & Sons.

Hughes, W., Champion, R. and Murdoch, J. 2007. Construction Contracts: Law and Management. Routledge.

Klee, L. 2018. International Construction Contract Law. John Wiley & Sons.

Lester, A. 2007. Project Management, Planning and Control: Managing Engineering, Construction and Manufacturing Projects to PMI, APM and BSI Standards. Butterworth-Heinemann.

Ross, A. and Williams, P. 2012. Financial Management in Construction Contracting. John Wiley & Sons.

Turner, D. 2014. Design and Build Contract Practice. Routledge.

Uher, T., Uher, T. and Davenport, P. 2009. Fundamentals of Building Contract Management. UNSW Press.