Management

Professional Practice and Ethics:

• Code of Ethics: Civil engineers adhere to a set of fundamental principles and canons that
guide their professional conduct. These principles include:
o Safety, Health, and Welfare: Civil engineers prioritize the safety, health, and
welfare of the public in their work. Sustainable development principles are also
considered.
o Competence: They provide services only within their areas of expertise.
o Honesty and Objectivity: Civil engineers issue public statements truthfully and
objectively.
o Conflict of Interest: They avoid conflicts of interest and act as faithful agents for their
clients.
o Professional Reputation: Civil engineers uphold the honor and integrity of their
profession.
o Professional Development: Continuous learning and development are essential
throughout their careers.

Parties Involved in Civil Engineering

Projects

• Owner: The owner is the entity that

funds the project and has the
ultimate decision-making authority.
They are responsible for defining the
project requirements, securing
financing, and selecting the
engineering and construction teams.
• Engineer: The engineer is responsible for the technical aspects of the project, including
design, planning, and construction oversight. They must ensure that the project meets all
applicable codes and standards.
• Contractor: The contractor is responsible for the physical construction of the project. They
must comply with the engineer's plans and specifications and complete the project on time and
within budget.

Responsibilities in Civil Engineering: Engineers, Owners and Contarctor

Civil Engineer Rights:

• To propose suitable designs and solutions.
• To ensure compliance with standards and regulations.
• To be compensated for professional services.

Civil Engineer responsibilities:

• Technical Expertise:
o Design structures that are safe, functional, and meet building codes.
o Analyze loads and stresses to ensure the structure's stability.
o Prepare construction plans and specifications.
• Project Management:
 oOversee construction phases and ensure quality control.
o Manage budget and timelines.
o Coordinate with contractors and other engineers.
• Safety:
o Implement safety protocols at the construction site.
o Address any safety concerns that may arise.
Project Owner Rights:

• To set project objectives, budget, and timeline.

• To select qualified professionals and contractors.
• To approve designs, changes, and payments.

Project Owner responsibilities:

• Project Vision and Funding:
o Clearly define project goals and objectives.
o Secure funding for the project.
• Project Oversight:
o Hire qualified engineers and contractors.
o Review and approve project plans and designs.
• Decision-Making:
o Approve major changes during construction.
o Manage risks associated with the project.

Contractor Rights:
• To bid on projects.
• To receive timely payments.
• To work in a safe environment.

Contractor Responsibilities:

• Construction Execution: The contractor is responsible for physically building the project
based on the engineer's plans and specifications. Their key duties include:
o Mobilizing manpower, equipment, and materials to the construction site.
o Executing the construction work as per the plans and adhering to quality standards.
o Maintaining a safe work environment for their employees and subcontractors.
o Completing the project within the agreed-upon timeframe and budget.
• Communication and Documentation: The contractor works closely with the engineer:
o Regularly communicating progress updates, challenges encountered, and potential
solutions.
o Maintaining detailed records of construction activities, materials used, and any
deviations from the plans.

Overlapping Responsibilities:
• Communication: Both parties need to communicate clearly and regularly throughout the
project.
• Problem-Solving: Working together to address any unforeseen issues that may arise.
Types of Contract:

Lump-sum

Types of contract
Item rate
( As per PWD)
Percentage
contracts.

1. Lump Sum Contract (Fixed Price Contract):

• Description: A lump-sum contract, also known as a stipulated sum contract, is a type of

construction agreement where the contractor agrees to complete an entire project for a pre-determined
fixed price. This price is established upfront and covers all labor, materials, equipment, and other costs
associated with the project..
• Risk Allocation:
o Owner: Bears the risk of cost overruns due to unexpected conditions or design changes.
o Contractor: Responsible for completing the project within the agreed budget, even if
unforeseen circumstances arise.
• Suitable for: Well-defined projects with a clearly outlined scope of work and minimal
anticipated design changes.
Feature Advantage Disadvantage
Owner knows the total project cost Owner bears risk of cost overruns from
Budget Certainty upfront. unforeseen conditions or changes.
Less paperwork and simpler Limited flexibility for changes during
Administration management. construction.
Contractor Encourages efficiency to maximize Requires detailed plans to avoid under-
Incentive profit within the fixed price. bidding by the contractor.

2. Item Rate Contract:

• Description: An item rate contract, also known as a unit price contract or schedule of rates contract,
is a construction agreement where the contractor is paid based on the actual quantities of work
completed for each pre-defined item in a Bill of Quantities (BOQ).

Here's how it works:

• Bill of Quantities (BOQ): During the bidding process, the client or engineer prepares a
BOQ. This document lists various work items with estimated quantities for each.
• Contractor's Bid: Contractors submit bids with a unit price for each item in the BOQ. This
price represents the cost per unit (e.g., per cubic meter of concrete, per square meter of
painting) for completing that specific item.
• Payment: After the contract is awarded, the contractor performs the work. The client's
representative measures the completed quantities of each item according to the BOQ. The
contractor is then paid the product of the measured quantity and the pre-agreed unit price for
each item.

Key Features of Item Rate Contracts:

• Transparency: The pricing structure is clear, with each item's cost explicitly defined. This
allows both parties to understand the cost breakdown.
 • Flexibility: This contract type can accommodate some variations in the final quantities of
work compared to initial estimates.
• Fairness: As long as the BOQ is accurate, both parties share the risk of quantity variations. If
the actual quantities are less than estimated, the contractor receives less payment. Conversely,
if more is required, the contractor is compensated for the additional work.

Things to Consider with Item Rate Contracts:

• Detailed BOQ: The accuracy and completeness of the BOQ are crucial. Missing items or
inaccurate estimates can lead to disputes later.
• Measurement and Verification: A clear process for measuring completed work quantities
and verifying their accuracy is essential to avoid disagreements.
• Potential for Cost Fluctuations: The final project cost can vary depending on the actual
quantities of work required. This can be a concern for both owner and contractor.

Suitability:

Item rate contracts are well-suited for projects with the following characteristics:

• Well-Defined Work Items: The specific types of work to be completed can be clearly
identified and categorized.
• Uncertainty in Quantities: There may be some uncertainty regarding the exact amount of
materials or labor needed for each item.
• Potential for Scope Changes: The project scope might have some flexibility, allowing for
adjustments to the quantities of certain items.
Risk Allocation:
o Owner: Bears the risk of price fluctuations if the actual quantities of work differ
significantly from the estimates.
o Contractor: Responsible for the quality of work and adheres to specifications, but the
final cost can vary based on actual quantities.
Feature Advantage Disadvantage
Requires a detailed and accurate Bill of
Transparency Clear cost breakdown for each item. Quantities (BOQ).
Can accommodate variations in final Potential for cost fluctuations depending on
Flexibility work quantities. actual quantities.
Shares risk of quantity variations Requires a clear process for measurement
Fairness between owner and contractor. and verification of completed work.

3. Percentage Contract:

Description: Percentage contracts, also known as cost-plus-percentage contracts, are a type of

construction agreement where the contractor is reimbursed for their actual project expenses (labor,
materials, equipment) plus a percentage of those costs as their profit and overhead.
Key Features:
• Cost Reimbursement: The contractor isn't paid a fixed price upfront. Instead, they are
reimbursed for all their legitimate project expenses with proper documentation.
• Profit Incentive: The contractor receives a pre-determined percentage markup on the total
project cost, incentivizing them to keep expenses controlled.
Risk Allocation:
• Owner Risk: The owner bears most of the risk for cost overruns. Since the final price
depends on the contractor's total expenses, the owner has less control over the overall project
cost.
• Contractor Risk: The contractor has less financial risk compared to a fixed-price contract.
However, their profit directly hinges on efficient cost management.
Suitability:
• Limited Scope Definition: Percentage contracts can be suitable for projects with a high
degree of design complexity or unforeseen conditions where a fixed price is difficult to
establish upfront. This allows for flexibility in the scope of work.
• Fast-Track Projects: They can be appropriate for fast-track projects where design and
construction progress simultaneously, making cost estimation challenging.
Pros and Cons of Percentage Contracts:
Pros:
• Flexibility: Adaptable to changing project requirements.
• Incentive for Efficiency: The contractor has some incentive to control costs since their
profit is based on a percentage of those costs.
Cons:
• High Risk for Owner: The owner has minimal control over the final project cost.
• Potential for Abuse: Without proper controls, contractors might inflate costs to increase
their profit percentage.
• Limited Contractor Motivation: The profit incentive for cost control can be weaker
compared to fixed-price contracts.
Additional Considerations:
• Detailed Cost Tracking: A robust system for tracking and verifying all project expenses is
crucial to prevent cost overruns and potential disputes.
• Clear Fee Structure: The contract should clearly define the specific percentage markup the
contractor receives.
• Open Communication: Maintaining open communication and collaboration between owner
and contractor is essential for successful project delivery under a percentage contract.
Feature Advantage Disadvantage
Adaptable to changing project High Risk for Owner: Owner has minimal
Flexibility requirements. control over the final project cost.
Contractor has some incentive to Potential for Abuse: Without proper
Incentive for control costs since their profit is based controls, contractors might inflate costs to
Efficiency on a percentage of those costs. increase their profit percentage.
Limited
Contractor The profit incentive for cost control can be
Motivation weaker compared to fixed-price contracts.

4. Guaranteed Maximum Price (GMP) Contract:

• Description: A hybrid approach combining elements of lump sum and cost-plus contracts.
The contractor sets a maximum price for the project but is incentivized to complete it for less.
Any savings are shared between the owner and contractor.
• Risk Allocation:
o Owner: Shares some risk of cost overruns but has a capped maximum price.
o Contractor: More risk than a lump sum contract but has the potential for profit if the
project comes in under budget.
• Suitable for: Projects with a moderately complex scope where some cost uncertainties exist.
5. Time and Materials Contract (T&M Contract):

• Description: The owner pays the contractor for the time spent by workers (labor hours) and
the materials used at an agreed-upon rate.
• Risk Allocation:
o Owner: Bears most of the risk for cost overruns since the final price depends on the
total time and materials used.
o Contractor: Less financial risk but has minimal incentive to control costs or expedite
completion.
• Suitable for: Relatively small projects or situations where the scope of work may change
frequently.