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Basis of Contracts
Basis of Contracts: Under a lump sum contract, the contractor agrees to perform the work described in the bidding documents for an exchange of a fixed sum of money which covers cost of construction including labour cost, material, equipment cost and overhead and profit. That is assuming no appreciable changes, the owner will pay no more than the contractor’s bid price. This leaves most of the financial risks to the contractor. a) Basis – JCT Contract 2008 Where the contract sum is determined before construction work is started. The contractor undertakes a defined amount of work in return for an agreed sum. “Contracts with quantities” and priced on the basis of drawings and firm bill of quantities. “Contracts without quantities” are priced on the basis of drawings and another document- usually a specifications or work schedule. b) Basis – FIDIC 1987 52.1 - All the variation referred to in Clause 51 and...
Sample Performance Security
Sample Performance Security [ insert Bank’s Name, and Address of Issuing Branch or Office] Beneficiary: [ insert n ame and a ddress of the Employer ] Date: ________________ P ERFORMANCE G UARANTEE No.: _______________________ We have been informed that [ insert name of the Contractor] (hereinafter called “the Contractor”) has entered into Contract No . [ insert reference number of the Contract] dated [insert date of the contract] with you, for the execution of [ insert name of contract and brief description of Works] (hereinafter called “the Contract”). Furthermore, we understand that, according to the conditions of the Contract, a performance guarantee is required. At the request of the Contractor, we [ XXXXXXXXXXXXXXXX] hereby irrevocably undertake to pay you any sum or sums not exceeding in total an amount of [ insert name of the currency and amount in figures] ( [amount in words] ) , [1] such sum being payable in the type...
Crude Oil Process
🛢️ 1. Extraction (Getting Crude Oil) Crude oil is found deep underground or under the sea. Oil wells are drilled into the earth to bring the crude oil to the surface. This raw oil contains oil, gas, water, and impurities . 🧹 2. Separation and Cleaning Before refining, crude oil is cleaned to remove water, salt, and dirt. This prevents damage to the refinery equipment. The clean crude oil is then ready for refining. 🔥 3. Refining (Main Process) Refining happens in a refinery , where crude oil is heated and separated. This is called Fractional Distillation . Steps: The crude oil is heated in a furnace until it becomes vapor. The vapors enter a distillation column — a tall tower with trays at different levels. Different components condense at different temperatures: Top: LPG, petrol (gasoline) – light and cool. Middle: Kerosene, diesel – medium weight. Bottom: Lubricating oil, bitumen – heavy and thick. ⚗️ 4. Conversion Proc...
The Project Development Phase
The Project Development Phase The project development phase prepares the groundwork for the tendering phase . During this stage, the project team expands , and several important activities take place to ensure the project is ready to move forward. Main Tasks in the Project Development Phase Identify what factors drive the project’s success (called project drivers ). Study and analyze the site conditions. Define the technical features of the plant or facility. Develop a clear project strategy. Find investors if the project needs financial backing. Discuss and finalize the sales model with all key stakeholders. Apply for all necessary permits and government approvals. Decide on the most suitable procurement strategy (how materials and services will be purchased). Project Drivers Every project has certain main goals or factors — called project drivers — that determine how decisions are made. These drivers can be technical (related to design o...
If the Engineering Consultant’s design is faulty but the contractor also builds the work badly, who is responsible?
If the Engineering Consultant’s design is faulty but the contractor also builds the work badly, who is responsible? This type of question comes up often — especially when the Engineering Consultant asks the contractor to fix bad work, and the contractor claims the real problem is the faulty design. The contractor might argue that even if the work was done poorly, it would have failed anyway because the design itself was wrong. This issue was discussed in the case XYZ Company v LMN Co. It was an appeal against an arbitrator’s decision, and the court decided not to change the arbitrator’s award because the arbitrator’s reasoning was correct. In that case, the design was done by a nominated subcontractor, but the same principle applies as if the design had been made by the Engineering Consultant. To find out who is liable, we must identify the main or “operative” cause of the defect. The arbitrator found that the main cause was the design fault, and the contractor’s mistakes only m...