Architecture / June 25, 2018 /
Construction involves the production of large scale capital assets which affect not only the client, designers and constructors but also users, the public, and the environment at large. Common law regulates the rights and obligations of the contracting parties not only to each other but also their duties of care to society in general.
The payment arrangements adopted on a contract directly affects the level of risk borne by the contractor. Where the contract is let on the basis of a drawings and specification lump sum the contractor assumes the risk for both the quantity and pricing. In lump sum contacts based on bills of quantities and remeasurement contracts the contractor assumes the risk for the pricing only. With reimbursement contracts the client assumes the risk for the quantity and pricing. The payment arrangement, therefore, directly motivates the contractors efforts to carry out the work in an efficient and economic manner. This in turn has a major impact on the final price paid by the client.