Types of contracts

In my Blog i would like to describe the general procedure for preparation of quotation when the company receive the enquiry from the client. Initially the received bid is thou roughly scrutinised for the worth of quoting the bid. The nature and financial involvement is assessed by viewing the bid. The bid may be a normal Labour contract, only a small infra structure civil contract, only a part package of the project , may be either Engineering,Procurement and construction project or a normal erection contract . 

                     Labour contracts :Every company in India have their own policies in selection of the work for execution. Some contracting  companies wish to participate in all works of construction. It may be a civil contract, mechanical contract, electrical contract others which is purely construction in nature. This means whatever materials related to the construction activities either consumables or construction materials every item will be supplied by the client. Only labour portion of the contract will be carried out by the contracting company. The contract value of which will be very less. The contractors who have labours under their control wishes to execute such bids. Bigger companies with their own resources don’t wish to participate in such bids

LABOUR CONTRACTOR WITH WORKERS

Civil contracts : When the owner wishes to control the cost of the project normally the infr tructure facilities like local roads( Temperorary in nature) to be provided for their Engineering, rocurement and contraction contractor ,they develop the facilities with their own officers and only hiring a medium sized contractor who can carry out such projects ( Mostly from local area) are selected. In such cases the civil materials like bricks, sand,rebar,metal etc.According to clarifications ,contractors are classified as Class A,B,C based on their resources and financial capabilities. When the work starts the design and darwings required for execution of the works are normally prepared by the design and engineering contractor selected by the owner of the project and the execution at site is being carried out by the officers of the owner.

Buil                                                    Building Contractor

Packaging Route : Certain clients having sufficient workforce implements the project on package   route. It means the major equipments and material procurement actions are taken care by the owner himself and units forming part of the project which are readily available in market with sufficient experience in that particular field are purchased by owner. In the presence of the representative of the package supplier the client himself hire a small contractor and under the guidance of package vendor the contractor completes the works of the package. Normally the value of contracts are normally less except for major erections like boilers of higher capacity. Based on the size and capacity of the package the client choose a contractor who has sufficient experience in that particular field along with financial capabilities. In case  the client wants to capture good reputed contractors for installation they combine major packages together to increase the contract value of the installation.

                                Erection Contracts : When big factories are set up for the production of power, fertilizer ,petrochemicals and ore beneficiation plants the volume of items to be installed are huge and many and in most of the cases such items can not be handled by client himself. Hence it becomes absolutely necessary for him to engage a standard contractor to carry out major installation works. The erection works are complex in nature and involves installation of many items like structural steel, Heavy equipments, rotary equipments, pipe line works with various materials of construction . To handle such a big volume of work it may not possible either by a small or a medium sized contractor. Hence the client/ owner has no option except to select a contractor with good financial capability along with their own major resources to execute the work in time with quality.  Contracts of that nature are being handled by big contracting companies in the country.

Read my next post regarding cost estimation of Erection contracts