The preliminaries in construction contracts and what they should include
When it comes to construction projects, every construction business uses written contracts; the process begins with a meeting between the contractors and the client to decide the degree of planning the requirements for the project. The preliminary construction contract is an initial stage where they agree. It is also essential as it helps the stakeholders resolve disputes and focus on the project’s details, bill of quantities, contract administration, and more. This article highlights critical aspects of preliminary in construction contracts and what are the prelims included in the arrangements.
What are Preliminaries in Construction Contracts?
Construction contracts are agreements between commercial or residential contractors and clients based on the client’s requirements for their construction projects. A firm contract should be able to outline various aspects of construction, such as the project’s scope, in a much more detailed form, as it leaves no room for error or confusion for both parties.
Preliminaries play a vital role in construction projects because they ensure that all essential aspects required for project completion are considered. A preliminary estimate in civil engineering provides an understanding of the expenses and resources needed apart from the actual construction work. This facilitates improved project planning, budgeting, and risk management. When preliminaries are included in the contract, the client and contractor gain an overview of the project requirements, minimizing any chances of disputes or misunderstandings.
Types of Construction Contracts
Here are some of the common types of construction contracts:
- Lump sum contracts: Fixed price contracts, or lump sum contracts, involve an agreement between the commercial or residential contractors and the client regarding a predetermined price for completing a project. The client pays the contractor in fixed installments, while the contractor bears any additional expenses. This type of contract is most suitable for projects with a defined scope and a comprehensive understanding of project costs.
- Time and materials contracts (T&M): These preliminary in construction contracts are based on the resources utilized during the project. The contractor can charge their clients for the time spent on the project site and the materials consumed. This type of contract is more appropriate when dealing with projects with scope and uncertainties regarding project costs.
- Unit price contracts: These are based on the price per unit of an item or service. The contractor gets paid according to the quantity of work completed at the agreed-upon unit price. This type of contract is suitable when the project’s scope is clearly defined and a specific amount of work is required.
- Guaranteed maximum price contracts (GMP): It is similar to time and materials contracts but with a price limit. The commercial or residential contractors are responsible for the completion of the project within a limited period, and they cover any additional costs. GMP contracts work well for projects that have uncertainties regarding project costs.
- Cost-plus contracts: In these contracts, the payments are made based on the project’s cost, including additional fees for the contractor’s services. The contractor bears all project costs, including materials, labor, and overheads, receiving compensation for their services accordingly. Cost-plus contracts are suitable when there is uncertainty involved in estimating project costs.
Each contract has pros and cons; however, each preliminary estimate in civil engineering provides a solution that reduces errors or confusion between the client and contractors. It also ensures they agree on analyzing various aspects and the project’s scope.
Elements Included in Preliminaries
Bill of Quantities
This document provides a breakdown of the quantities and costs involved in materials, labor, and equipment needed for the project.
Contract Administration
It ensures the overseeing and monitoring of preliminary estimates in civil engineering and the performance progress and adherence to obligations.
Site Investigation and Surveys
It is the process of evaluating the site’s characteristics, such as soil composition, geology, and topography, to ensure the feasibility of construction.
Project Planning and Management
Defining project goals, developing a plan, and effectively overseeing project execution.
Health and Safety Plan
It is a process of documentation outlining the safety measures and emergency procedures to ensure the safety of workers and the people in the surrounding areas during construction activities.
Insurance and Compliance
It ensures that all legal compliance and requirements are met by obtaining insurance coverage for the project.
Dispute Resolution
It ensures the resolution of conflicts between clients and contractors that may arise during construction to ensure completion according to plan.
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