Construction Contracts Overview

What is a Lump-Sum Contract?

• The contractor agrees to complete the entire project for a fixed amount.

• Payment is based on agreed rates per unit of work.

• Combines project design and construction in a single contract.

• The contractor is responsible for delivering a fully operational facility.

What is a Unit-Price Contract?

• The contractor agrees to complete the entire project for a fixed amount.

• Payment is based on agreed rates per unit of work.

• Combines project design and construction in a single contract.

• The contractor is responsible for delivering a fully operational facility.

What does a Design and Build Contract entail?

• The contractor agrees to complete the entire project for a fixed amount.

• Payment is based on agreed rates per unit of work.

• Combines project design and construction in a single contract.

• The contractor is responsible for delivering a fully operational facility.

What is the purpose of Performance Security in a construction contract?

• To ensure the contractor submits a performance security equivalent to 5% to 10% of the contract price.

• To provide a warranty for defects after project completion.

• To impose penalties for delays in project completion.

• To ensure compliance with safety and quality standards.

What is the retention money in a construction contract?

• 10% of each progress payment is withheld as retention money.

• A fixed amount for lump-sum contracts.

• Penalties for delays in project completion.

• A one-year warranty period for defects.

What are the grounds for contract termination?

• Poor performance, insolvency, abandonment, or failure to comply with contract terms.

• A one-year warranty period for defects.

• Penalties for delays in project completion.

• The contractor must submit a performance security.

What is the role of the Engineer in a construction contract?

• Acts as the Employer’s representative, overseeing the works.

• Provides the design and specifications.

• Executes the works as per the Employer’s design.

• Ensures compliance with safety and quality standards.

What does the Defects Liability Period refer to?

• A specified period after project completion during which the Contractor must repair any defects.

• The timeframe for completing the project.

• The percentage of work completed and certified by the procuring entity.

• The contractor must submit a performance security.