Types of construction contracts
The management of a company plays an important role in decision-making in an organization. The management of a company is responsible for the success or failure of decisions. Even before the start of the project, there are many steps that the management of a company takes. The steps may involve preparing reports, such as estimation and analysis reports. Management has to regain board approval from various boards and departments. Management may need to prepare full reports. After the preparation of several full reports, the employers are called. In this case, employers can also be described as contractors. The employers will then submit the documents related to the tender. Then various types of discussions will take place between management and contractors, such as price negotiation, work experience, and after showing various work experience certificates. Single or multiple employers are chosen to work on a specific package, specification, or contract. The employer must complete all the necessary paperwork before starting to work on the contract. Construction contracts are of three types. The types of contracts may be different in various countries.
There are three types of contracts, these types of contracts can vary by country, depending on the type of market.
The three types of contracts are full turnkey, discrete turnkey, and non-turnkey contracts.
Total turnkey contract:
In this type of contract, the contractor is fully responsible for everything. Responsibilities may include submitting design documents; Process engineering which may include assembly, redesign, testing using various testing techniques. Responsibility also includes the supply of various equipment or materials to the construction site, the installation of the material and, as described above, the testing of the installed or erected material, the commissioning and the demonstration of the performance of the erected material and the management of everything that has been successfully tested in the performance of the management of the company. Then management will approve the payments to the contractor.
Discreet turnkey contract:
This type of contract is different from the other two contracts. In the discrete turnkey contract, the design, engineering, supply of material or equipment, assembly of equipment and commissioning of equipment is performed by a single agency.
The management of the company or the employer will designate other contractors to carry out the construction work. Here, the drawings can be provided by the management itself based on the supply of the equipment by the contractor. Management is also involved in the approval of drawings, if submitted by the contractor.
Non-turnkey contract:
This type of contract is completely different from the other two contracts. Basically, non-turnkey contracts are also called item rate contracts where drawings can be prepared and delivered by the drawing consultant’s company management, if any, employed by the company’s management. The contractor will only work on the basis of the drawings provided. Non-turnkey contracts mainly involve civil and structural contracts.
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