Contract Contracts Or Lump -sum Contracts - 1224 Words

Contract is a major part in procurement management. Types of contract required for all the relevant elements related to the project: †¢ Fixed - price contracts or lump -sum contracts: Certain amount is agreed for the goods or service being sold. The buyer and the seller agree on a well defined to be delivered material for a specific price and time. The contract can include some incentives fee for meeting or exceeding the project objectives. While purchasing the high cost machinery items like loader, lifter etc for the production of the product of our venture a contract was done in a fixed- price with Jason Manufacture and Suppliers Company. He supplied the heavy machinery items in time and did provide better equipments within the contracted amount. The venture was happy so he as incentive fee and promised to give him more contracts in the mere future. †¢ Cost- Reimbursement Contracts: Payment is done to the seller for direct or indirect actual cost. This type of contract is done when the scope of the project is not clear. The risk is absorbed by the buyer as the final cost is uncertain. If problem arises during the execution of the project, the buyer has to spend more money than he had estimated. While ordering the machines like computers, wires, CCTV, stationary items, furniture s from the Lone distributers and suppliers, the exact amount and the exact quantity were not estimated. We did a contract. Certain quantities were ordered at first. Later we had to pay more moneyShow MoreRelatedCase Analysis : Lump Sum Contract3711 Words   |  15 PagesCPCCBC4003A - Assessment 3 - LA018068 Chris Brennan 377274831 Question 1 – Contract Types - †¢ Lump Sum Contract – A lump sum contract is when the principal (the customer or owner) agrees to pay a contractor a fixed amount for completing the work without requiring a cost breakdown. This price excludes any price variation due to rising or falling costs of labour and materials. †¢ Lump Sum Subject To Rise and Fall – A contract subject to rise and fall means that the principle (the customer or owner)Read MoreThe Complexity in Construction Projects1284 Words   |  5 PagesConstruction Projects are intrinsically complex in nature. It varies in different aspects such as size, nature, Contract Value etc. It involves different parties including the Client, Designer, Engineer, and the Contractor, whose interests vary from each other. Under these complex circumstances, the success of any project is dependent on the type of contract opted for the contract, along with several other factors such as the most appropriate design, askillful execution team, a good working relationshipRead MoreConstruction Contracts Essay1036 Words   |  5 PagesConstruction Contracts 1. Name and briefly describe each of the two basic types of competitively bid construction contracts. Which type would be most likely used for building the piers to support a large suspension bridge. Why? Two basic types of competitively bid construction contracts are lump-sum and the unit-price contract. The lump-sum contract is when the contractor agrees to complete all work for a pre-determined price including profit and the contract. The unit-price contract is when theRead MoreWhy Do We Use Different Types Of Contracts On Projects?1045 Words   |  5 Pages 2.1 CONTRACT ESTABLISHMENT Why do we use different types of contracts on projects? â€Æ' 2.2 LEARNING OBJECTIVES At the end of this section you will be able to: †¢ Describe the typical contract types †¢ Explain key elements that govern contract type selection †¢ Explain the key principles of agreement between Reliance and the contractor â€Æ' 2.3 CONTRACTS TYPES †¢ Lump Sum – Contractor is required to provide upfront for all risks and costs for performing to contract defined requirements;Read MoreA Large Investment Projects1090 Words   |  5 Pagesbenefits Project procurement Management Project procurement involves managing contracting activities – from defining the end product, contract and market analysis, through the tendering process, up to the formulation of contracts, specification of performance standards/ timelines etc., and the management and administration of the product/service after the contract has been awarded. Project procurement management concludes when the contractual aspects of the project are finalized at the end of theRead MoreConstruction Management1118 Words   |  5 PagesConstruction contracts. Author: PaweÅ‚ Kotas, Polska Construction as a service activity having many dimensions. Starting from ideas, thru find funds, investor, design construction, find contractor, phase of construction, meet the requirements which investment needs to be in use and complete facility. All these aspects are associated with large amounts of documents, permits. In this essay will be described various types of contracts between the investor and the contractor. Contract is an agreementRead MoreThe Textbook References Purchasing And Outsourcing As Types Of Procurement1313 Words   |  6 Pagesrequired to be created or bought from someone outside the project team or organization. In order to make this decision, make-or-buy analysis is done by the project team that helps them to decide whether to perform activities within the team or to contract with a seller. Most of the organizations don’t have enough qualified resources for performing all the activities of a project. Therefore during make-buy-analysis project team objectively look at the skills that are required to make a product andRead MoreThe Oil And Gas Industry1662 Words   |  7 Pagesdelays and the claims in the project, the client’s uncooperative interference, and lengthy procedures in the project. Establishing the contract terms through reciprocal compromise and concession can be an effective strategy (Jergeas 2008). However, it is hard to achieve reality because one risk can be more powerful compared to the other, especially for the contracts that involve small specialized and big oil contractors. In other words, the formulation of the strategies of the procurement processRead MoreDescription Of The Construction Bidding Process1213 Words   |  5 Pagesplan out availability of materials and labor to satisfy the owner’s desired construction schedule. Many contractors and subcontractors have their own bidding strategy with the purpose of producing the lowest bid that will ultimately win them the contract. A good bidding strategy includes careful review of bid documents and a job site walk through. Once the bid package is reviewed and the contractor has a general understanding of the project they should take up the opportunity to visit the locationRead MoreTypes Of Contract Method For Construction Management1622 Words   |  7 Pages2.3 Contracts There are several types of contract method and these methods generally fall under three categories: Fix price (FP) or lump sum (LS), guaranteed maximum price (GMP) and reimbursable contracts. These methods can be applied to any contracting for construction management. Lump sum contact, also called fixed price is when an owner engages an entity to perform a fixed scope of work for an agreed lump sum payment (Cmaa, 2012). Guaranteed Maximum Price (GMP) is a contractual arrangement between