Architecture / June 15, 2018 / Oriane
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.
Local contractors are usually at an advantage when competing for work. Contractors who have the capacity to construct work from within their own organisation should, in theory at least, be more competitive than those who sub-contract large proportions of the work. Current site management practice however tends to favour the widespread use of subcontractors. Nevertheless, the ability to attract labour and to source materials in the locality is an important factor in ensuring that unnecessary travelling and transport costs are not incurred in carrying out the work. Seeley notes that contractors will have to consider whether management, labour and plant resource requirements can be met from within the contractors own organisation or whether it will be necessary to recruit specifically for the project. The contractor will also have to consider what demands the proposed project would put on own plant, scaffolding and equipment.