• Define contracts.
• Identify the different types of contracts.
A contract can be anything from a formal written
document to a simple handshake deal to do a job
(where the only thing in writing is a quote on the back
of an envelope).
A contract can be anything from a formal written
document to a verbal promise.
Written contracts provide more certainty for both parties than verbal
contracts. They clearly set out the details of what was agreed. Matters
that can be set out in a contract include:
1. materials
2. timeframes
3. payments
4. a procedure to follow in the event of a dispute
A written contract can:
1. Provide proof 6. Set out how a dispute
2. Help prevent will be resolved
misunderstandings 7. Set out how the
3. Give you security and contract can be varied
peace of mind 8. Serve as a record of
4. Clarify your status what was agreed
5. Reduce the risk of a 9. Specify how either party
dispute can end the contract
A written contract is essential:
1. when the contract price is 5. where the contract contains
large essential terms
2. where there are quality 6. where you need to keep
requirements etc. certain information
3. where there is doubt confidential
4. when you must have certain 7. when it is required
types of insurance 8. where there is a legal
obligation
Examples of paperwork that may support a verbal contract:
1. emails
2. quotes with relevant details
3. lists of specifications and materials
4. notes about your discussion – for example, the basics of your contract
written on the back of an envelope (whether signed by both of you or
not)
A standard form contract is a pre-prepared contract where:
1. most of the terms are set in advance
2. little or no negotiation between the parties occurs
Some independent contractors and hirers use a 'period contract’.
This is a contract template that sets out the terms for a business
relationship where the contractor is engaged to work from time to time.
In the building and construction industry, these contracts are called
'period trade contracts'.
The contract template applies each time the hirer offers work to the
contractor and the contractor accepts it. This can occur when either the:
1. contractor provides a quote and receives a work order from the hirer
2. parties sign an addendum that sets out the specific work to be done
or the final outcome
❖ https://www.business.gov.au/Products-and-services/Contracts-and-
tenders/Types-of-contracts
❖ Contracts, Specifications and Engineering Relations by Daniel W. Mead
• Define and explain the bidding process.
• Define and identify the contents of
advertising bids and bidding proposals.
Bidding is a procurement method by which you can
select the vendor for purchasing the required goods
or for completing subcontracted work within the
estimated budget and time.
1.The project manager or contract/purchasing manager
creates a bid that describes the specifications and
estimated cost of the project.
2.The manager issues the bid.
3.(Optional) The reviewers approve the bid.
4.The manager sends the bid to a group of vendors for
response.
5. The vendors analyze the bid and calculate the cost at which they
can complete the project. Each vendor responds to the bid with
details about the products and services that are needed and the
overall cost.
6. The manager manages and analyzes the bid responses.
7. The manager awards the bid to the vendor that best meets the
requirements of the project.
8. A standard contract is automatically created by using the bid
details and response information.
Used to bring the proposed letting to the notice of
manufacturers, contractors or others who may be interested
in such work in order that suitable competitions may be
secured.
The advertisement should be clear and concise in its statements
The advertisement should be published not only in the usual way.
The advertisement should not be published until specific conditions are
met.
• By whom bids will be received
• Where received
• When received
• Nature of work or material to be furnished
• Location of work
• Amount of work or material to be furnished
• When contract is to be begun and when finished
• Where plans may be seen or obtained
• Where specifications may be seen or obtained.
• What security will be required with proposal.
• What bond will be required with contract.
• When proposals will be opened.
• When contract will be awarded.
• Other information of interest or importance to non resident bidders.
• From whom general information may be obtained.
• Reservation of rights to reject any or all bids, or to waive informalities.
• Official signatures of officers letting work or receiving bids.
• Public Works
• Private Works
More of a competitive process.
By law, any public projects requires competitive bidding.
Commonly set in place to guarantee the lowest construction price for the
public project.
Usually see tax revenue or publicly issued bonds as the main source for
funding.
The contract being awarded to the lowest bidder.
Private projects’ owner is responsible for funding.
Looked at as a quality driven action, rather than a price driven action
which is typically the norm.
Contractor who has been invited to bid was evaluated by their previous
work, experience, and reputation.
Criteria are factored to see how the contractor handles the workload,
and if they can finish a project in a timely manner.
Constructed by private parties, partnership or corporations.
❖ https://www.ibm.com/support/knowledgecenter/en/SSFCZ3_10.5.3/c
om.ibm.tri.doc/proc_topics/t_ctr_bid_vendor.html
❖ Contracts, Specifications and Engineering Relations by Daniel W. Mead
