Procurement and Contracts: Types, Process, Remedies, Selection, and Documentation

Procurement and contracts
Name of the Student
Name of the Professor
City/Date
Date/Month/ Year
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Procurement and contracts
QUESTION 1
Provide an example for each type of construction contracts
Types of construction contracts include;
a) Lump sum contract. It needs the contractor to agree to provide for a specified service
over a period of time.
b) Unit price contract. This is where the task to be carried out is broken down into numerous
parts, normally by construction trade.
c) Cost plus contract. Is an agreement which involves the buyers' consent to pay the
complete cost for materials as well as labor in addition to the amount for contractor profit
and overhead (Piper, 2017, p. 201).
d) Incentive contracts. Cost reimbursement in which a target cost, profit or price is measure
as a point of difference for various monetary-incentive.
e) Time Based contracts. The contractors are paid by the owner for the time taken by the
subcontractor and the builder.
Differences among various types of construction contracts
Differentiation point Cost plus contract Unit price contract Lump sum contract
Advantage to the
contractor
No risk Risk is low Incentives are allowed
for early completion
Disadvantage to the
contractor.
There is no incentive for
early completion
There is no incentive
for early completion
Risks are high
Advantage to the
owner.
The project can
commence without the
The risk is shared
with the contractor.
The overall cost is
articulated in timely
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Procurement and contracts
design completion stages
Disadvantage to the
owner.
The overall cost is
uncertain at early stages
The overall cost is
uncertain at early
stages.
Decreasing cost by the
contractor may lead to
detriment of quality.
Flexibility of design
change
More flexible to changes
in design.
Is flexible to changes
in design.
Flexibility is limited
Provide examples of each type of construction contract
a) Unit price contract-price as per hourly and quantities
b) Lump sum-A definite total lump sum price.
c) Time and material- Workers involvement in building of a house based on clock and clock
timing.
d) Cost plus-Designing and building a house costing 54m.
QUESTION 2
Explain the process of construction contracting
 Concept-Organizing and designing.
 Procurement-Bidding document.
 Bidding-Awarding of contract.
 Acceptance- contract coming to an end
What are the key important elements of construction contract?
 Legal purpose whereby the offer and acceptance of the contract must be provided under
legal conditions.
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Procurement and contracts
 Mutual Agreement whereby a contract must be accepted fully by the two parties.
 Acceptance where each party to the contract must accept it freely.
 Consideration, whereby all those involved must agree having value as well as the
counterpart. (Pinnells, 2008, p. 77).
What are the key important elements of the construction contract
 Offer. A party agreed to or not to carry out certain activities in future.
 Consideration. Promising certain values in exchange of specified action.
 Acceptance. The offer was accepted by both parties.
 Mutuality. Both parties involved came to agreement after the discussion.
QUESTION 3
Various remedies of Breach of contract
There are five remedies for breach of contract which include money damages, rescission,
specific performance, reformation, and restitution.
 Injunction- A court order compelling a party to do or refrain from a specific task.
 Restitution- Is a remedy establishing for restoring the party injured to the state the party
was before the agreement was formed (Piga, 2013, p. 154).
 Rescission- Is the name for the remedy where all the duties of the two parties are
terminated.
 Reformation-Is the type of remedy that allows the court to alter the constituent of a
contract to correct inequalities that were suffered.
 Specific performance- Is an equitable remedy that compels one party from or to perform
his/her duties as articulated in the agreement.
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