Summary: Contract Practice P1

Read the summary and the most important questions on Contract Practice P1

• 1 Contract Fundamentals

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• What is a construction contract?

  A construction contract is a legally binding agreement between parties defining responsibilities, scope, payment terms, and risk allocation for delivering a project.

• What are the documents that formed the Contract?

  1. Contract Agreement
  2. Letter of Acceptance
  3. Letter of Tender ( Such as appendix to tender, addendum)
  4. Condition of Contract (Particular and General)
  5. Specification
  6. Drawings
  7. Schedule (Priced BOQ, Daywork Schedule, schedule of rates and/ or Prices, schedule of payment)

• What is consideration in contract law?

  Consideration is the value exchanged between parties, typically payment by the client in exchange for work or services.

• 2 Standard Forms of Contract

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• What are the main FIDIC contract forms?

  
  

  • Red Book – Construction
    
  • Yellow Book – Design-Build
    
  • Silver Book – EPC / Turnkey
    
  • Green Book – Short form
    
  • Gold Book – Design Build Operate
    
  • White Book – Consultancy agreement
    

• What is the role of the Engineer in FIDIC contracts?

  The Engineer administers the contract, certifies payments, assesses variations, and ensures compliance with the contract conditions.

• What is the philosophy of NEC contracts?

  NEC contracts promote:
  

  • Collaboration
    
  • Transparency
    
  • Early warning of risks
    
  • Programme management
    

• Who administers the contract in NEC?

  The Project Manager administers the contract.

• 3 Contract Pricing Mechanisms

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• What is a lump sum contract?

  A contract where the contractor agrees to complete the project for a fixed price.
  Risk of cost overruns is mostly borne by the contractor.

• What is a re-measurable contract?

  A contract where the contractor is reimbursed based on actual quantity plus an agreed-upon fee or percentage.
  

  1. Suitable where quantities are uncertain;
  2. less cost certainty for employer 

• What is a target cost contract?

  A contract where a target cost is set and savings or overruns are shared between client and contractor.