CO-OPERATION IN CONSTRUCTION SECTOR CONSTRUCTION CONTRACTS Dr CO-OPERATION IN CONSTRUCTION SECTOR CONSTRUCTION CONTRACTS Dr. Judit Gyulay – Dr. Zoltán András Vattai BUTE Department of Construction Technology & Management

Construction Industry CONSTRUCTION AFFAIRS Construction Sector Construction Industry

TYPICAL DELIVERIES OF CONSTRUCTION INDUSTRY erecting new buildings - reconstructing existing buildings - remodeling existing buildings - extending existing buildings - demolishing existing buildings

FEATURES OF CONSTRUCTION PERFORMANCES immovability of product - performance exposed to weather - transport of great volumes - environmental charges/effects - high exposition

STAKEHOLDERS OF CONSTRUCTION PROJECTS Client (Investor) - Manager (Engineer) - Designer (Acrhitect) - Contractor (Craftsmen) - Bank - Authorities (Community)

PROCUREMENT POLICIES CONTRACTUAL RELATIONS (PROCUREMENT SYSTEM) „Traditional” Client Designer Contractor Sub. Sub. Sub. Sub. Sub.

PROCUREMENT POLICIES CONTRACTUAL RELATIONS (PROCUREMENT SYSTEM) „Turn-key” Client Designer Contractor Sub. Sub. Sub. Sub. Sub.

„Construction Management” PROCUREMENT POLICIES CONTRACTUAL RELATIONS (PROCUREMENT SYSTEM) „Construction Management” Client Designer Engineer (Manager) Contractor Sub. Sub. Sub. Sub. Sub.

„Management Contract” PROCUREMENT POLICIES CONTRACTUAL RELATIONS (PROCUREMENT SYSTEM) „Management Contract” Client Designer Engineer (Manager) Contractor Sub. Sub. Sub. Sub. Sub.

PROCUREMENT POLICIES CONTRACTUAL RELATIONS (PROCUREMENT SYSTEM) „Main Contract” Client Main Contractor (Manager) Designer Contractor Sub. Sub. Sub. Sub. Sub.

- Contract of works - Agency Contract - … TYPE OF CONTRACT - Contract of works - Agency Contract - …

Design - Management - Accomplishment - Supply - Service - … SUBJECT OF CONTRACT Design - Management - Accomplishment - Supply - Service - …

RANGE OF CONTRACT Main contracting - General contracting - Co (-general-) contracting - (Sub-) Contracting - Service / Supply - Representation (agency)

Contractor - Client - Subject - Deadlines - Offset ESSENTIAL DATA OF CONTRACTS Contractor - Client - Subject - Deadlines - Offset Who - Whom for - What - What time - What price

FINDING CONTRACTUAL PARTNERS „PROCUREMENT” – Free-hand (based on trust) – Tendering (competition) = Public = Restricted (invited) = Direct negotiation

SPECIFYING DELIVERY (DETAILS) „TRADITIONAL” Preparation Design Procurement (contracting) Accomplishment Clear details: known technical, technological, time and budget specifications at contracting

„MANAGEMENT” SPECIFYING DELIVERY (DETAILS) Preparation Design Procurement (contracting) Accomplishment Change- and risk management have essential role

Lump-sum (fixed price) - Unit price - Cost + fee OFFSET OF CONTRACTUAL DELIVERIES Lump-sum (fixed price) - Unit price - Cost + fee Timing of offset of deliveries is also a price-forming factor („cost of financing”)

„APPENDICES” OF CONTRACTS Referred standard contractual schemes, sets of regulations (FIDIC, VOB, …) - Technical documentation (plans, specifications, budgeting, …) - Referred technical standards (quality- and performance expectations)

ENGENDERING A CONTRACT - Written contract (e.g. by FIDIC, VOB, …) - Oral agreement (with precedents) - Implied contract (?!)

PUBLIC PROCUREMENT Controlled mainly is the Client - Purchase on public funds - Strictly controlled procedures - Specific risks elements - Price raising effects (!!!)

PUBLIC PROCUREMENT ~20 % of building deliveries - Periodicly „changing” conditions - Balanced contracts - Precise (in-time) offset - Highly exposed investments