Construction Management Week 3

COURSE: CE 5324 CONSTRUCTION MANAGEMENT

LEVEL: GRADUATE

ASSIGNMENT # 3

TOTAL POINTS: 200

LEARNING OBJECTIVES:

After successfully completing this assignment, students will be able to:

? Compare typical contracts used in the construction industry

? Prepare quantity and cost estimate of small residential and commercial

projects

Note: Your work should be professionally presented and all the steps for calculations must be

included.

Q1. You are hiring a general contractor for your upcoming commercial project. Use the

following website to create a contract document as an owner. Please create at least 7 different

events under the payment section. Complete the contract and submit the document along with the

answers to the following questions: 100 points

Website link: https://www.rocketlawyer.com/document/construction-contract.rl#/

a) Name the three most important components of a contract and describe how these

components are handled in this sample contract.

b) Explain the deadline and procedure for submitting payment requests.

c) What are the possible conditions for default under the contract?

d) How will the disputes be resolved?

e) What additional clauses you would like to have in this sample contract to minimize your

risk as an owner?

Important Notes:

? At the end of creating your document on the McGraw-Hill website, the website prompts

you to sign up for a 7-day free trial. However, it asks for credit card information. You

DO NOT have to submit your card information. If you are able to receive your contract

via email from this website, then use it. You can also take screenshots of the construction

document that is created. As a second alternative, you can use the attached document

Construction Management Week 3

instead. The Rocket Lawyer website is the preferred method. However, if you are not

able to receive your contract then use the attached contract.

? Q1 requires that we add at least 7 different payment events in the contract, however, the website only allows up to 6 that can be created. If you continue, it provides an option to

write-in additional payment provisions or instruction. You can add an additional payment

event in this section:

It also provides an option to add an additional provision to the contract at the very end of

generating the contract. It can also be added here, though the first option is best since it’s the

payment section.

Construction Management Week 3

Q.2: Different contract types have different financial implications or impacts on the owner and

the contractor. Fill in the chart below to show how costs affect both parties. 50 points

The project has a COST PLUS contract (the contractor’s fee is based on 8% of construction cost)

Hint: Please follow the example on slide #25 of the weekly lecture.

Find out the fee amount first and then follow the example.

Contract Actual Impact on Contractor Impact on Owner

Amount Amount

Incl. Fee

$500,000 $525,000

$500,000 $475,000

Q.3. An owner has got complete plans and specifications for a project. You (as a

general contractor) submit a good and fair bid for the work and the owner accepts your bid.

The two of you shake hands but you do not sign an agreement. We have learned that not having a

contract in writing can be a problem for both the contractor and the owner. (Assume that your

oral contract with the owner is valid) 50 points

a) Explain by giving two reasons that you are at risk because your contract is not in writing.

b) Explain by giving two reasons that the owner is at risk because your contract is not in writing.