Types of Construction Contracts and the Contracting Process in Project Management

This document provides an overview of types of construction contracts, the contracting process in project management, elements of a construction contract, remedies for breach of contract, steps in procurement management, factors to consider in contractual procurement management, ways of selecting a contractor for a project, information to be included in contract documents for a construction project, and the process of contract and procurement for painting works.

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Project Management
By Name
Course
Instructor
Institution
Location
Date

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Question 1
Types of Construction Contracts
Fixed price contracts
This is a type of contact which includes penalties for the missed deadlines and benefits for early
termination. The contract is usually used when the risk needs to be transferred to the builder, and
at the same time, the client wants to avoid change orders for the unspecified work (Surahyo,
2017, p. 347).
Cost plus contract.
This type of contract involves the payment of the actual purchases, costs or other expenses that
are generated directly from the construction activities.
Time and material contracts
This kind of construction construct is preferred in situations where the scope of the project is not
clear. In this contract, the client and the contractor must establish agreed rates, which includes
additional expenses which could arise in the process of construction.
Unit pricing contract
In this contracting the unit prices usually help during the order process as the client requests for
specific quantities and the pricing of each unit to for the pre-determined amount of the unutilized
items.
Differences between the construction contracts.

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Cost plus contract is usually used in the situations where the scope of the project is a subject to
confirmation while time and material contract is used in the situations where the scope of the
project is not clear (Collier, 2015, p. 430).
The fixed price contract explains the benefits and the limitations associated with the completion
of the project in regards to the deadline while others do not.
Examples of construction contracts
Contract example
Time and material the contractor is paid by the actual cost
of direct labor, usually at specified hourly
rates
Unit pricing contract Horizontal construction, such as roads
Fixed price a web designer can offer a fixed-price
contract for the design of a website
Cost plus the contractor paid for all of its allowed
expenses
QUESTION 2
The process of construction contracting
The process of contracting involves the following steps
Planning
Initiation

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Awarding
Contract
Implementation
The figure below is an illustration of the contracting process in construction.
Elements of a construction contract
The following are the elements of a construction contract.
 Full names, signatures, and address of both parties
 Scope of work
 Project costs and terms of payment
 Schedule of work
 Authority
Scope of work

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This element of a contract should be in details, explain the services to be offered which include a
description of the materials, grade, quality, schedule of work, and other specifications pertinent
to the construction of the project for example including the bill of quantities in the contract.
Project costs and terms of payment
There should be no confusion in the contract as to the cost of services included in the contract,
for example, the schedule of payment and the terms and conditions of payment.
Schedule of work
This is an established clear notice to proceed, the construction start date and the completion date
of the construction project
Authority
This involves the clear outline of who has the authority to make decisions during the
construction of the project — for example, the clear outline of duties of all parties involved in the
construction contract.
Question 3
remedies of Breach of Contract
Compensatory damage for the breach of the contract. This is the most common remedy for the
breach of contract whereby one party seeks compensation for the financial losses due to the
breach of contract.
Punitive damages for breach of contract. The actual damages or compensatory covers the loss the
non-breaching party incurred because of the breach.

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Restitution in breach of contract cases explained. Restitution is a remedy which is designed to
restore the injured party to its original state before the contract was developed (O'Reilly, 2017).
Specific performance of the contract. This is a remedy for the breach of a contract in which the
court forces the breaching party to perform the services or deliver the goods as per the
agreement.
Rescission in breach of contract cases
Rescission is usually a remedy which is used to end the contract when the parties which entered
the contract by way of fraud or mistake.
Limitations of Contract Remedies
Delay, i.e., if any party in the contract is a victim of fraud, he or she must act promptly order to
rescind at the common law, or she will lose the rights, and the remedies will be limited.
The certainty of the damages, I.e., the person will be able only to recover the number of damages
which the law can be able to prove with substantial certainty.
Foreseeability, i.e., if the damages which come from the breach of the contract lack
foreseeability, they will not be recovered (Clough, 2017, p. 502).
Loss of power of avoidance.
Question 4
various steps in Procurement Management of an Organization
The steps involved in procurement management are as follows;
 Need for recognition whereby each organization need for the product they require

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 Specific needs
 Source option
 Price and terms
 Purchase order
 Delivery
 Expediting
 Receipt and the inspection of the purchases
 Payment and invoice approval
 Record maintenance
factors to consider in the contractual procurement management
proper strategic drafting of the right contract
Correct evaluation of the contract
Monitoring of the contractor’s performance
Adaptability
Taking preventive and initiative actions
The qualification, knowledge and the experience of the contract management team
Question 5
ways of selection contractor for a project
References and referral
Integrity

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and a good working relationship
Considering experience
Budget and schedule compliance
Sustainability and energy efficiency
the contractual relationship in a Construction Contract
Risks
Responsibilities
Supplies
Acceptance
Warranty
Payment
Question 6
information to be included in a contract documents for a construction project
Title and purpose of the project
Description of the project to be carried out
Payment schedule
Cot estimate
Insurance information

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Client and contractor credentials
Materials
Warranty
Exclusions
Documents to be included in contract documents for a construction project
Article of agreement
Both architectural and engineering drawings
Specifications
A schedule of tender adjustments
Schedule of work
Working drawings.
Question 7
the process of contract and procurement for the painting works
The process is carried out as follows.
Qualifying contractors
Preparing specifications
Evaluating Bids
Awarding the contract.

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References
Clough, R. H., 2017. Construction Contracting: A Practical Guide to Company Management.
3rd ed. Chicago: John Wiley & Sons.
Collier, K., 2015. Construction Contracts. 4th ed. London: Merrill/Prentice Hall.
O'Reilly, M., 2017. Civil Engineering Construction Contracts. 2nd ed. London: Thomas Telford.
Surah, A., 2017. Understanding Construction Contracts: Canadian and International
Conventions. 1st ed. London: Springer,