CONSTRUCTION

CONTRACTS AND
RELATIONSHIPS
Civil Engineering Technology Project Management –
PGMT 2470
CONTRACTS
 Typical construction project
involves 3 contracting parties:
 Owner
 Designer
 builder (contractor)
 These parties can be arranged in
numerous types of contracting
deliveries
 TRADITIONAL DELIVERY

PROJECT
OWNER

DESIGNER BUILDER
Arhcitect/Engineer General Contractor
TRADITIONAL DELIVERY
 Project fully designed before work
begins
 Lump sum project
 Sequential delivery; design, bid and
build
 Makes use of a single general
contractor
 Series of estimates been done
(conceptual)
 Estimates developed with so little
information
 DESIGN – BUILD DELIVERY

PROJECT OWNER

Design / Build Firm

Contractor Contractor Contractor

DESIGN – BUILD
 Single organization assumes design and
Project construction
 Fast track delivery; design, subcontractor
bids and construction (overlaps)
 Owner specifies location, size, design and
desire time for the project (preliminary)
 Bidders submits designs and cost to satisfy
owner
 Contractor assume responsibility for both
design and construction for price quoted
 Most delivery system of choice
CONSTRUCTION MANAGER DELIVERY

PROJECT OWNER
Arch. / Eng. Construction
Manager

Contractor Contractor Contractor

CONSTRUCTION MANAGER
 Facilitates overlap between project
stages
 Fast track delivery; stage 1, stage 2, etc.
 Construction manager assumes overall
control and coordination of the work
provided by the general contractor
 Cost control
 Construction work well underway and
paid before bid for final phase received
 Estimating abilities of construction
manager and team must be of highest
standard
OWNER - AGENT

PROJECT OWNER
In-House Contract
Designer Designer

Owner's
Co-ordinator

Contractor Contractor Contractor

CONTRACT - Definition

 Legally, a contract must contain the

following elements:
 Intention to Create
 Consideration
 legal capacity
 lawful purpose
 genuine consent
 Offer and Acceptance
FORMS OF CONTRACTS

 The following forms of contracts are

commonly found in construction:

 lump sum (a.k.a. fixed price)

 unit price
 cost plus
 design build
ROLE OF OWNER

 From earlier discussion, owner is

key member of owner-designer-
builder group
 Owners own or possess legal rights
to land
 Normally sign contracts with
designer and builder
TYPE OF OWNERS

 Owners include:
 small
business operators seeking
new office/warehousing
 largenational/multinational firms
building factories, stores, etc.
 developer-owners who develop land
and buildings expressly for sale to
others
OWNER’S involvement in
construction

 Based on the wide range of owners,

there will be a wide range of
involvement in the construction
 Owners may have no contracting or
construction experience or may
have specialized engineering and
construction staff
OWNER’S interest in costs

 Owners who will directly

occupy/operate buildings/plants
are usually more concerned with
total costs

 totalcosts = construction +
maintenance
 total A.K.A. “life cycle costs”
 Owner-developers are more sensitive
to land and construction costs
OWNER’S risk

 Traditionally, owners wished to transfer

all the uncertainties and risks to the
builder
 Major construction risks associated with
site conditions (underground etc.)
 Led to spiraling construction costs
 A growing trend is for owner’s to assume
most risks thereby reducing the
construction costs
DESIGNER

 Designers can be
architects/engineers/draftsman-
designer/etc.
 The scope of a designers
involvement is dependent on the
owner-designer contract
DESIGNER’S role

 Designers level of involvement can

include any or all of the following:
 preparation of drawings
 preparation of specifications
 coordination of builder selection
process
 administration of owner-builder
contract
 supervision of construction
 etc.
DESIGNER’S role –cont’d

 The designer has traditionally held

the role of third party “judge”
 Is this role valid considering the
owner-designer contract?

 The designer as contract manager

 Isthe design skill set the same as the
contract manager skill set?
SUMMARY

 Contracts
 Different types of Contract
Deliveries
 Forms of Contracts
 Types of Owner’s and their Roles
 Designers and their Roles