Contract

1. An agreement enforceable by law is contract. The contract invariably follows a proposal from one party and the acceptance by the other. In absence of any of the above elements of a contract, it becomes void. i.e. without a legal effect or voidable.

2. The following are the various types of contracts for execution of civil engineering works:-

   1. Item rate contract
   2. Percentage rate contract
   3. Lumpsum contract
   4. Labour contract
   5. Materials supply contract
   6. Piece-Work agreement
   7. Cost plus percentage rate contract
   8. Cost plus fixed fee contract
   9. Cost plus fluctuating fee contract
   10. Target contract
   11. All in contract

The different types are: - 1. Item rate contract:

a. An item rate contract is one in which the contractor agrees to carry out the work as per the drawings, bills of quantities and specification in consideration of a payment to be made entirely on measurements taken as the work proceeds, and at the unit prices tendered by the contractor in the bill of quantities.

b. The bill of quantities, which forms a part of the contract documents, greatly assists in keeping the tendered sum as low as possible.

c. The owner cannot be absolutely sure of the total cost that he would have to incure until the work is completed

d. Both the owner and the contractor have to do considerable computation and book-keeping during the progress of the work. Both the parties are required to appoint staff to record the measurement of the work done.

2. Percentage rate contract:

a. This form of contract differs from the item rate contract in respect of the method of tendering the contractors it rates.

b. While tendering, the contractors do not have to write the rate of each item, but a percentage figure by which the estimated unit rates are to be increased or decreased, the same percentage figure being applicable to all the items.

c. The only benefit claimed by this form over the unit price contract is that there is no scope for a contractor to submit an unbalanced tender.

3. Lump sum contract:

a. In a lump sum contract the contractor agrees to carry out the entire work as shown in the drawings and described by specification, supplying labour and materials, all for a specified lump sum.

b. The main feature of the agreement is that the contractor agrees to fulfill his entire contractual obligation for the stipulated payment, no matter what trouble or expense he encounters or incurs in doing so.

c. If no extras are contemplated the tenders inform the qwner exactly what the project will cost him. This provides a sound footing on which he can take a decision either to start the project or abandon the same.

d. Before a contract is let out, the project has got to be thoroughly investigated and all the contract documents kept ready in every respect. This entails costly and time-consuming work, which is often difficult to accomplish.

4. Labour contract:

a. The special feature of this type of contract is that the owner agrees to supply all the requisite materials to the contractor and the latter agrees to supply all the labour and workmanship necessary to complete the work according to the drawings and specifications.

b. This type of contract is suitable for those cases where the owner is in a position to buy large quantities of materials at favorable rates.

5. Piece-Work agreement:

a. As the name signifies the piece work, agreement is that for which only a rate is agreed upon without reference to the total quantity of work to be done within a given period.

b. Urgent small work may be taken up for execution without inviting tender and considerable time is saved.

c. If a contractor delays to execute the work or uses inferior quality of materials or leaves the work partially complete, another contractor may be engaged at any time.

d. For this type of small work, approved contractors find little interest and as such work is entrusted to petty contractors having little experience in management system and adequate knowledge to carry out the work according to departmental procedures.