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Additional resources for Civil engineering project management
Without such a clause the contractor has to add a margin to his prices to cover expected inflation, so he runs a risk he might not have allowed enough while the employer runs the risk that he might have to pay more than the actual inflation increase. Calculating extra costs due to inflation can be complicated and time consuming for the contractor and the employer's supervisory staff, so that often a formula using officially published indices of prices is used instead. 8). (b) Payment terms Most standard conditions of contract contain specific provisions for interim payments and require payment of interest to the contractor if the employer fails to pay on time.
Properly drawn up and administered, a contract under these conditions appears fair to both parties, and the percentage of contracts ending in a dispute which goes to arbitration is very small. (b) ICE Conditions for Ground Investigation These conditions are based on those described under (a) but allow for the investigative nature of the work and the need for reports and tests. 1(a)). The need for a maintenance period and for retention money is left to the drafter, and will depend on whether permanent works, such as measuring devices, are included.
The contractor usually remains responsible for constructing the works, his methods and expenditure being agreed with the employer, or on a day-to-day basis with the employer's project manager or resident engineer on site. An employer may be reluctant to adopt a cost reimbursement arrangement because the cost outcome is uncertain and the employer has to rely on the contractor to be efficient and not waste money. These objections can be overcome to some extent by adopting a target cost approach as described below.