Cork institute of technology

Cork Institute of Technology - CIT Institiuid Teicneolaiochta Chorcai

Form of Tender

The form of tender is a standard form. This document is a Form of Tender which is used for applicants to provide costing details. It is the document used to record the pricing and can also be used to highlight the operational plan, and for the applicant to provide additional information on breakdown on castings. Care should be taken not to over-complicate matters by asking tenders to provide an excessive breakdown which will not be analysed and is meaningless, but it can be useful to check comparisons in for example, number of proposed staff, hours worked and can then raise questions for interview. The form basically states that We A.N. other agree to construct_______ for the sum of _________etc.

General Conditions of Contract

The General Conditions of Contract define terms under which the contract will be carried out. The General Conditions are an integral part of the contract for construction for a large project and they are incorporated by reference into the owner-contractor agreement. They set forth the rights, responsibilities, and relationships of the owner, contractor, and architect. Though not a party to the contract for construction between owner and contractor, the architect participates in the preparation of the contract documents and performs construction phase duties and responsibilities described in detail in the general conditions. This contract states the power, responsibilities of all parties. These include general conditions which are common to all types of contracts, as well as special conditions which are peculiar to a specific contract such as, contract change conditions, payment conditions, price variation clauses; penalties. Normally I.E.I conditions of contract are used. What happens if? Delay due to weather? Etc

Specifications

The Specifications basically describes the nature class and quality of materials and workmanship. E.g. the amount of aggregate, cement and steel that are to be used. There are a number of standard Specifications are in existence. Construction specifications, or construction specs for short, are documents that instruct contractors what needs to be done at a construction site. They are available for review before a contractor bids on a project, and are often relied upon by the contractor in order to provide an accurate quote. While construction specifications may not address all issues that will come up, the goal is to cover as much as possible. In the event that unexpected issues arise, the construction specifications may outline how to deal with them, either through changing orders, or consultation with the owner or architect.

Construction specifications will usually provide a number of lists as well, including the materials that are to be used, where they are to be used, and how much should be used. Contractors who disagree with the specs need to consult with the architect before bidding. If the contractor does not feel the job can be done with the materials specified, the best option is to avoid bidding. The other option is to ask that the construction specifications be amended to allow the use of alternate materials.

Construction specifications will also usually provide a time by which the project should be completed. It will also on time, or at least finish by the deadline. This will likely be the major factor in determining whether an interested contractor bids on a project. Those without the staff to handle the time constraints, or who have other conflicting projects, may decide they cannot do the job.

The scope of the work will also be set forth by the construction specifications. If there is any demolition or excavation, for example, that may be handled in the main specifications, or possibly by a completely different set of construction documents. Any electrical or plumbing work needed will also be included in the specifications. In some cases, this may be bid on separately, depending on the type of project being done. In other cases, it may be the responsibility of the general contractor to hire subcontractors for this work.

The Bill of Quantities

This document is where the materials parts and labour are itemized. The Bill of quantities is prepared by a quality surveyor. The contractor puts his prices against each item on the list. The bill of quantities details the operations required to build a standard construction project. It covers the costs of inputs including labour, materials and plant, subcontracting, preliminaries and overheads. It also covers contractors profit or loss, architects and engineers fees and non-deductible taxes. A bill of quantities is structured to provide a weighted price for each component specified which, when summed across components, provide the purchasers price for the standard construction project described.

Drawings

These are the drawings of the project.Drawing mean the contract drawing annexed to this contract and any modifications of the same ordered or approved in writing by the Chief Mechanical Engineer or any further working drawing or sketches, which may be furnished or approved in writing by him.

Form of agreement

Form of agreement is a formal legal undertaking when a contractors tender is accepted. When the contractor signs this form he is agreeing to undertake the project and any conditions that may apply to the project.

Performance Bonds

This is a document by which the contractor provides a formal assurance to the client that the company will complete all its obligations under the contract. The Guarantor or Surety is usually a bank insurance co. that provides the bond on payment of a fee. If the contractor defaults the surety is required to reimburse the client for any loss.

Construction bonds usually involve a type of bond called a surety bond. A surety bond is not an insurance policy. A surety bond is a guarantee, in which the surety guarantees that the contractor, called the principal in the bond, will perform the obligation stated in the bond. For example, the obligation stated in a bid bond is that the principal will honor its bid; the obligation in a performance bond is that the principal will complete the project; and the obligation in a payment bond is that the principal will properly pay subcontractors and suppliers. Bonds frequently state, as a condition, that if the principal fully performs the stated obligation, then the bond is void; otherwise the bond remains in full force and effect.

If the principal fails to perform the obligation stated in the bond, both the principal and the surety are liable on the bond, and their liability is joint and several. That is, either the principal or surety or both may be sued on the bond, and the entire liability may be collected from either the principal or the surety. The amount in which a bond is issued is the penal sum, or the penalty amount, of the bond. Except in a very limited set of circumstances, the penal sum or penalty amount is the upward limit of liability on the bond.

The person or firm to whom the principal and surety owe their obligation is called the obligee. On bid bonds, performance bonds, and payment bonds, the obligee is usually the owner. Where a subcontractor furnishes a bond, however, the obligee may be the owner or the general contractor or both. The people or firms who are entitled to sue on a bond, sometimes called beneficiaries of the bond, are usually defined in the language of the bond or in those state and federal statutes that require bonds on public projects.

There are several categories of surety bonds- bid bonds, performance bonds, and payment bonds.

A bid bond guarantees the owner that the principal will honor its bid and will sign all contract documents if awarded the contract. The owner is the obligee and may sue the principal and the surety to enforce the bond. If the principal refuses to honor its bid, the principal and surety are liable on the bond for any additional costs the owner incurs in hiring others to fulfil the contract. This usually is the difference in dollar amount between the low bid and the second low bid.A performance bond guarantees the owner that the principal will complete the contract according to its terms including price and time. The owner is the obligee of a performance bond, and may sue the principal and the surety on the bond. If the principal defaults, or is terminated for default by the owner, the owner may call upon the surety to complete the contract. Many performance bonds give the surety three choices: completing the contract itself through a completion contractor; selecting a new contractor to contract directly with the owner; or allowing the owner to complete the work with the surety paying the costs.

A payment bond guarantees the owner that subcontractors and suppliers will be paid the monies that they are due from the principal. The owner is the obligee; the beneficiaries of the bond are the subcontractors and suppliers. Both the obligee and the beneficiaries may sue on the bond. An owner benefits indirectly from a payment bond in that the subcontractors and suppliers are assured of payment and will continue performance. On a private project, the owner may also benefit by providing subcontractors and suppliers a substitute to a mechanics lien. If the principal fails to pay the subcontractors or suppliers, they may collect from the principal or surety under the payment bond, up to the penal sum of the bond. Payments under the bond will deplete the penal sum. The penal sum in a payment bond is often less than the total amount of the underlying contract, and is intended to cover anticipated subcontractor and supplier costs.

References

NOAA, 2009, Types of contracts, accessed on 26th March 2010 from http://www.ago.noaa.gov/ago/index.cfm

Chris Hendrickson and Tung Au, 2001, Project Management for Construction accessed on 26th March 2010 from http://pmbook.ce.cmu.edu/

Project management guides, 2010, Construction Project Management, accessed on 26th March 2010 from http://www.projectmanagementguides.com/GUIDE/construction_management.html

The Engineering Toolbox , 2005, Contract types, accessed on 26th March 2010 from http://www.engineeringtoolbox.com

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