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Construction projects – part 3 - Project requirements



Conditions of Contract

The contract is based upon the ‘condition of contract’ this being the rights, obligations and liabilities of all parties that will enter into the contract.
The ‘condition of contract’ is usually prepared by the consultant for large projects but may be simpler for small projects. In the latter case, it may consist of simple rules and other agreements between the Client and the Contractor. It is not recommended to carry out work based on a verbal agreement.

It is very easy, even where good intentions exist, for people to forget. When you are bidding for small jobs a formal contract may be replaced by the written quotation, see below.

Any bids must abide by the ‘condition of contract’ set out by the Consultant (Client) as part of the contract.
As such make sure that you understand all aspects of the ‘condition of contract’ if unsure consult an expert

Areas that will be referred to in the ‘condition of contract’ may include:

  • The method of payment
  • Any retention of monies
  • Payment for materials
  • Extra payments that may be incurred for deviations and modifications of the work
  • The period of the contract
  • Allowance for movements in the price of materials and labour
  • Insurance and protection against future losses (indemnity)

If you are able to use standard forms it will be easier and has particular advantages.

  • People will already be familiar with their content
  • Standard forms have usually been tested in law
  • Reduces costs in the preparation of new forms
  • Contain experiences gained over many years
  • Liquidated damages these are:

Also referred to as liquidated and ascertained damages Damages are said to be liquidated when the amount of damages recoverable in the event of a specified breach of contract (for example, late performance) is agreed at the date of the contract. In such circumstances, a liquidated damages provision will be included in the contract. When damages are not predetermined / assessed in advance then the amount recoverable is said to be 'at large' (to be agreed or determined by a court or tribunal in the event of a breach of contract).

  • Termination of contract conditions for both parties
  • Conditions under which there may be an extension of the completion date for the project
  • The terms of any arbitration

Specifications

Any project should work to particular standards. These standards are outlined within specifications for the various aspects of the project. If local standard specifications exist then use them. If they do not you will have to generate them yourself.
This sort of information can be vital should disputes occur.

Some examples of standards may be:

  • Specifying the aggregates in foundations
  • Specific mix of concrete
  • Specification of plaster mixes
  • The need for inspection of particular materials before use
  • Height of damp proof course etc

Quotation

Its usual to have these printed for small project work.

They may contain the following:

  • There will be a window of time that the quotation will be valid. After that a fresh quotation will be required
  • Payments should be made within 1 week of receipt of the bill.
  • A bill will be submitted at the completion of the work or at monthly intervals and will include labour to date and materials used to date.
  • Any extra work agreed required and agreed with the client is added to the bill. On occasion if a deviation means reduced costs these should be allowed for in the bill.
  • Where costs are unknown at the time a ‘provisional sum’ can be added. Once the true cost is known allowance can be made in the bill
  • The contractor can show concern, in writing, for any requirements made by the client. Should the client insist upon them the contractor can then not accept responsibility for their inclusion.
  • Include and agree a maintenance period after the completion of the project at the expense of the contractor
  • Completion dates may be subject to alteration due to weather etc.
  • The use of an arbitrator is advised for unsolved disputes

A quotation should be fair to both parties.

Quantities

Calculating the quantities of materials needed may be time consuming but it is worth it if you can take the time to do it yourself.
In this way you will not only save money by avoiding the use of consultants but also gain valuable experience.

A good starting point will be the ‘bill of quantities’ if one is provided by the consultant on behalf of the client.
Once you know all of the required components you will be able to calculate other aspects of the cost, that is, labour, materials.

When making your own list of quantities create them in the order in which they will be used in the construction as it makes it easier to follow the natural flow.

When looking at quantities there are two types:

Quantity surveyor’s and builder’s quantities.

The former represents those given in any official ‘bill of quantities’ provided by the consultant and the latter that which the builder believes will actually be required.

An example of this would be excavation for foundations. The Quantity surveyor’s quantities will show the volume of excavation required to satisfy the foundations only. The builder has to allow for excavation of a larger area to prepare ‘form work’ around the proposed foundation.

In terms of costing you might well have to increase your rates to make up for the difference.
If the client wishes you to excavate 500 cubic metres that is what they will expect you to quote for.
You may well realise that you will need to excavate 1000 cubic metres but you can only put in a quote for the 500.
So you will have to double your normal rate to allow for this.

Also other cost aspects will be affected. Having to excavate a larger volume means that extra equipment costs will occur.

Make sure when preparing your own ‘bill of quantities’ that you really consider all that must be done to complete a project.
For example, disposal of materials and landscaping a site. If you find there are some items that are not in a provided ‘bill of quantities’ you will have to put this in writing to the consultant ahead of the bidding process in order to clarify the situation.

Once you have the list of quantities you can then begin to calculate the costs.
These will be either direct costs or indirect costs.
Once you have the total costs you can then add an amount for your profit.

Non - PRINCE2 information