English for Construction Engineering Management ，建筑工 程专业英语 赖小东 授课教师：赖小东 Cell# 江西财经大学旅游与城市管理学院工程管理系

Construction Project Management

Lecture 3 Contracts Used for Construction Projects 2 1.Traditional approach: design-bid-DBB 2.Design & Build contract/D&B 3.EPC-turnkey project 4.Financed project 5.Management contract 6.Target cost/cost reimbursable

Contracts Used for Construction Projects 1. Contract Types Traditional vs. alternative Classification by method of award and method of pricing Model contracts have been developed by FIDIC, ICE, JCT, AIA, AGC etc.

Contracts Used for Construction Projects 2. Method of Award 2.1 Competitive bidding –formally advertised public work –selective invitation for private work –awarding of contracts by: Lowest responsible bid or Best value i.e.: technical score  price or price + time(f t ), and other variations

Contracts Used for Construction Projects 2.2 Negotiated contracts –Generally private work –Benefits include flexibility of pricing arrangement –Often used on projects of large size and great complexity –Owner may value expertise and integrity of a particular contractor and can award contract without competition that may otherwise exclude that contractor from the work

Contracts Used for Construction Projects 3. Method of Pricing 3.1 Fixed-price A. Lump sum –Traditional, single fixed price –Predetermined price that includes profit, overhead, and all other costs –Greatest risk to contractor resulting in a higher markup (the greater the risk, the higher required rate of return ) –Most common contract form

Contracts Used for Construction Projects 3. Method of Pricing 3.2 Cost-plus Contractor agrees to perform the work for a fixed or variable fee covering profit and home office costs (general overhead) Field costs are reimbursable at actual cost Used when: –nature of the work or physical conditions are unpredictable –scope is unknown or difficult to define

Contracts Used for Construction Projects 3.3 Types of Cost-plus Contracts A. Cost plus fixed % –Fixed % based on portion or all of reimbursable costs –Used in construction involving new technology or extremely pressing needs –Owner assumes risk –Contractor cooperation very high –Little or no incentive for cost savings

Contracts Used for Construction Projects B. Cost plus fixed fee –More incentive for cost savings –Incentive for timely completion –Risk shared by owner and contractor C. Cost plus variable % –Also called “sliding scale %” –Keeps fee in line with type & volume of work –Fee becomes progressively smaller on work that is repetitive, requires little or no re-engineering, re- planning, or additional layout

Contracts Used for Construction Projects D. Target estimate –May be based on dollar amounts, man-hours, schedule, or combination –Cost savings or overrun shared by owner and contractor at predetermined split –Cost underrun increases contractor profit, overrun decreases profit E. Guaranteed maximum price –Used with well defined scope of work –Particularly suitable for turnkey operation –Contractor or design-builder assumes all risk –Provisions to share savings can be applied

Contracts Used for Construction Projects 4. Traditional Approach: Design—Bid— Build/DBB TheDBB project construction has to follow the order of DBB DBB contract is typically based on the price of the bill of quantities. The project is divided into small individual parts for construction

Contracts Used for Construction Projects 5. Design and Build Contract/D&B The project team is a joint venture between an architect and a builder The contractor takes overall responsibility for design & construction Design and Build team will negotiate a fixed price/lump sum contract to complete the design and construction of the facility.

Contracts Used for Construction Projects 6. EPC Turnkey Project Typical type of contract for industrial plant construction sector, comprising the provision of engineering services, procurement of materials and construction. Employer is not involved with the detailed design process.

Contracts Used for Construction Projects 7. Financed Project BOT, PPP,PFI often used for toll highways and bridges entails the private sector providing finance In those form models, the government defines and grants specific rights to an entity (usually a private company) to build and operate a facility for a fixed period of time.

Contracts Used for Construction Projects 8. Management Contracts 8.1 CM The construction manager effectively acts as the overall manager and specialist contracts are entered into, often directly with the client.

Contracts Used for Construction Projects 8.2 Project Management Contract/ Managing Contractor In project management consulting, the consultant is to be responsible for the successful completion of the project within a specific time frame and on a specific budget.

9. Target cost/cost reimbursable Target cost/cost reimbursable contract are widely used in the utilities sectors. 9.1 Guaranteed Maximum Price/GMP The GMP is designed to limit the changes to the contract price or completion date and to reduce the contract mgt. effort by incorporating terms. 17 Contracts Used for Construction Projects

9.2 Target cost/Target Construction Sum –After a project brief or concept design in developed. The tender document sets a target cost based on the estimated cost of the construction work. –The contract is awarded based on the base of non- price criteria and tendered mgt. fees 18 Contracts Used for Construction Projects

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