Q1: Define Contract.
Ans:A contract is a legally binding document that recognizes and governs the rights and duties of the parties to the agreement.
Q2: Write the purpose of contracts?
Ans:
The purposes are as follows:- ➔ Defines the scope of the work
- ➔ Gives a time frame
- ➔ Defines the rules and regulations of work
- ➔ Defines the responsibilities
- ➔ Minimize disputes and misunderstandings
Q3: Define an Agreement.
Ans:An agreement is a mutual understanding or arrangement between two or more parties about their rights and responsibilities, often forming the basis of a contract.
Q4: Name some types of contracts.
Ans:
The types are as follows:- ➔ Item rate contract
- ➔ Lump sum contract
- ➔ Item rate plus lump sum contract
- ➔ Cost plus percent of cost contract
- ➔ Cost plus fixed fee contract
- ➔ Cost plus fixed fee plus bonus contract
- ➔ Design and construction contract
- ➔ Joint venture
- ➔ Sub contract
- ➔ Labor contract
- ➔ Package contract
- ➔ Turnkey contract
- ➔ Demolition contract
Q5: Define Joint Venture.
Ans:When two or more companies/firms collaborate for any constructional project then it is said to be a joint venture.
In a joint venture, each company has special expertise in specific fields.
Q6: Define Turnkey Project.
Ans:A contract which is made between two nations to meet a certain execution of work from inception to conception and whose payment is made either by respective national resources or items of international currency is known as turnkey contract.
Q7: Define Item Rate contract.
Ans:An item-rate contract is one in which the contractor agrees to carry out the work as per the drawings, bills of quantities, and specifications and different items are executed at different rates.
Q8: Define Lumpsum contract.
Ans:A Contract in which a contractor quotes a lump sum figure to carry out the work or construction of a specific work or supply of total material and labor in accordance with the given specifications, drawings & design in a fixed time is known as lump sum contract.
Q9: Define Sub-contract.
Ans:In this contract, a contractor divides the work among various small-level contractors, called the sub-contractors.
All the sub-contractors are in SUB-CONTRACT with the contractor. The terms and conditions of this contractor are either solely or partially like the contract of the contractor.
Q10: Define Cost plus Fixed Fee contract.
Ans:In this contract, a contractor holds the complete responsibility of the work including the material, machinery, manpower and execution.
The contractor pays the price of the work from his pocket. Afterwards when the project is completed, the owner pays back to the contractor all costs of the project and in addition also pays a fixed amount/fee to the contractor regardless of the cost of the project.
Q11: Define Demolition contract.
Ans:This contract is usually called for demolishing of the existing buildings up to the ground level or road level and removal of all the materials of the same including carry away of the debris.
Q12: Define Penalty.
Ans:If a contractor does not follow the terms and conditions of the contract, he is liable to face a penalty. The conditions of penalty are mentioned in the contract signed between the owner and the contractor. If a contractor delays the work, he faces a penalty on a daily basis.
Q13: Define Security Deposit.
Ans:The contractor whose tender is selected, is subjected to a security deposit. It is 10% of the total cost of the project. In addition to the 2% earnest deposit, the contractor pays an additional 8% so as to secure a 10% security deposit.
Q14: Define Earnest Money.
Ans:It is the security amount that the contractor deposits while submitting the tender. It is normally 2% of the total cost of the project. No tender is accepted without Earnest money.
Q15: Define Retention Period.
Ans:The duration of time between the submission of a security deposit (by the contractor) and the return of a security deposit (to the contractor) is called Retention period. It is normally 6 months.
Q16: Define Secured Advance.
Ans:It means advance payments made for the materials procured on the site. It is 75% of the total cost of the project.
Q17: Define Arbitrator.
Ans:A process for quicker settlement of disputes between the contractor and the department (or owner) is known as arbitration and the person that settles a dispute is an Arbitrator.
Q18: Define Arbitration.
Ans:A process for quicker settlement of disputes between the contractor and the department (or owner) is known as arbitration.
Q19: Define Liquidated damages.
Ans:Liquidated damages are a pre-agreed amount of money stated in a contract, which one party must pay to the other if they fail to meet specific terms, such as project deadlines.
Q20: Define Un-liquidated damages.
Ans:Unliquidated damages are not fixed in advance and are determined by a court or legal process based on the actual loss suffered due to a breach of contract.
Q21: Define Mobilization Advance.
Ans:Any advance payment made to the contractor for starting work is called mobilization advance.
It is approved by the Chief Engineer. A contractor should have a Bank guarantee to gain mobilization advance.
This advance is returned as a deduction from monthly payments.
Q22: Define Work Order.
Ans:A work order is a task or job which is scheduled or assigned to someone. Work order is not a contract as there is no formal agreement made and hence it is not enforceable in the court of law. A work order is issued when the amount of work and its completion time is known.
Q23: Define Day Work.
Ans:It includes the works such as repair work, aesthetic work etc. The laborers are paid for the days they work. In some cases, a contractor manages the day's work and a fixed amount is paid at intervals.
Q24: Define Piece Work Agreement.
Ans:Piece work agreement is based on the rates of work and the specifications of work. No completion time is mentioned in it. It is made mostly for smaller scale projects. The contractor pays no security fee and faces any penalty.
Q25: Name the methods of Execution of Construction Work.
Ans:
The methods are as follows:- ➔ Contract
- ➔ Day Work
- ➔ Piece Work Agreement
- ➔ Work Order