Construction Project Management Contract Agreement
Another type of contract used when the exact scope of a construction is unknown at the beginning is a time and equipment contract (T-M). Under this agreement, the debiteur pays a defined hourly rate for the number of hours worked and the cost of the materials used. The costs of the owner related to the purchase of materials, transport, etc., are charged on the basis of the time spent. In addition to costs plus contracts, duration and equipment contracts may also include provisions for minimum and maximum costs. When the size of a construction project and its full requirements and expenses are unknown, costs and contracts are often used. These agreements indicate an increase in the actual costs of labour and equipment generated during construction. This supplement is the manufacturer`s gain. While the format of the mark-up is agreed in the contract – usually in the form of a percentage of the actual cost or a fixed fee – the final cost is determined on the basis of actual work. Costs and contracts may also impose a minimum limit on spending or royalties.
Contracts provide a legally enforceable framework for the management of any type of business relationship, from employment contracts to parts and supply markets. While these agreements are the key to managing business and business relations in all sectors, it is especially important to do the contracts well when the ability to complete a construction over time, budget and code depends on all supplier agreements that work as intended. From the contractor`s point of view, contracts are also important to prevent litter infiltration and reduce the risk of unexpected cost overruns. Under a guaranteed ceiling price contract, the contractor sets a maximum tax in advance, consisting of the actual costs incurred during construction and a fixed fee subject to a cap. When the actual costs exceed the total contract amount, the contractor agrees to the overrun, unless the change is agreed and amended under the contract. If the actual costs are lower than estimated, the excessive fees are reimbursed to the buyer. While construction management agreements generally contain those mentioned above, they can be structured differently, with many types of contracts that have been designed to best meet the needs of all parties in all possible scenarios. Getting acquainted with the types of contracts that are typically involved in construction projects is an important first step towards optimizing all contract-related processes in construction management. Contracts that detail everyone`s obligations and the consequences of non-compliance are the key to ensuring that everything goes smoothly and that all parties fully understand their risks from the outset.