Construction Contracts in Engineering World
This article is about Construction Contracts. Construction projects are started with contracts. The contracts are various. There is a single contract for only a single work. There is also a single contract for the entire project process.
Types of Construction Contracts :
- Lump Sum Contract.
- Unit Price Contract.
- Cost Plus Contract.
- Construction Management Contract.
We will talk about the definition of those types of contract later in the next posts inshaAllah. But for now, let us talk about this construction contracts in general. Those contracts above are done by several ways. We can get the contracts by competitive bidding process or sometimes we can get the contract by negotiation. This negotiation is that if an owner wants to build a building, he can go to the company directly to ask them to build it. This contract is usually based on the trust of the owner to the contractor. In Saudi Arabia, Saudi Binladin Group is very recognized by the government. That is why the government give the government construction projects to Saudi Binladin Group. When it comes to Competitive Bidding, contractors should fight their best to give the owner the best price of the project. The best price is usually the cheapest one.
Nowadays, the Construction Contracts are mostly made in a shape of Design and Build Contract. So the bidding or negotiation is for whole construction process starting from design. We can call this contract as EPC (Engineering Procurement Construction). The contractors will design, provide the material and build the project by themselves. The owner will ask someone to supervise the construction on behalf the owner.
In getting the construction contracts, the contractors may make a joint operation. This happens when a company cannot suffice the project requirements. The joint operation will contain the companies that help each other to fulfill the needs.
The construction contracts can be really flexible on site. By the time of the construction, the contract can be changed as agreed by both party, the owner and the contractor. It is quite interesting to watch this process. For them who love construction, managing construction contracts is really challenging.