Due to the vast experience gained in contract mining and mining consultancy, Minalcon negotiated and managed contracts foster an environment of trust and flexibility, facilitate innovation, better collaboration on strategic planning and optimising skill sharing, resulting in BETTER VALUE for money and HIGHER SERVICE levels. LUMP SUM CONTRACT A single lump sum price may be quoted for the completion of the specified work to the satisfaction of the employer by a certain date. Use of this type of contract implies that design is complete and final. It is an undertaking to accomplish a definite result for a fixed sum of money. Such a contract may be used for the supply of a particular unit of process plant or material or for a package deal in which the contractor is responsible for both detailed design and construction. Although the contract is awarded on the basis of a single lump sum price- in all but the smallest of contracts it is likely that payment of a proportion of this sum will be made to the contractor on completion of each of a number of different stages of the work. It is essential that the work be capable of precise pre-estimation, since the contractor, after carefully analyzing the specification and the drawings, must be able to ascertain all the various construction processes and expenditure required. ADMEASUREMENTS CONTRACT There are the Admeasurements contracts in which the whole of the work is re-measured, and payment made for the work actually done. Within this category fall the Bill of Quantities and Schedule of Rates contracts. The Bill of Quantities contract facilitates competitive tendering but incorporates some mechanism for the introduction and evaluation of changes in the work conditions and content during the course of tile contract. The typical Schedule of Rates contract expressly excludes any revision of the rates quoted by the contractor except where the tender sum has been exceeded by a certain percentage. The essential difference between these types of admeasured contract is that in the Bill of Quantities contract the total Contract Sum is the Tender Sum which is given in respect of a fixed measure of work as set out in the Bills of Quantities, whereas in the Schedule of Rates contract the total Contract Sum can be calculated only upon completion of the contract. COST REIMBURSEABLE CONTRACT Cost Reimbursable contracts are used when the requirements of the employer are vague or when it is desirable for design to proceed concurrently with construction. Such contracts are also used when the employer wishes to be directly, involved in the management of the contract, or to reduce the financial risk to the contractor. COST PLUS CONTRACT A Cost Plus contract is the extreme form of the cost-reimbursable type and is so called because the contractor is reimbursed for all costs incurred during the fulfilment of the contract, plus an agreed fee to cover overheads and profit. The fee may be defined as a percentage of the agreed actual cost or as a fixed amount. Although it is normal to negotiate such a contract directly with the selected contractor, it is possible to introduce competition into the award of the contract by adopting two stage tendering procedure. The considerable advantage gained by involving the contractor in the detailed design may be offset by a lack of incentive for him to complete the work expeditiously. When a contractor has money at risk, as in all other types of construction contract, he will continually press the employer for design information so that he can achieve the best use of his own resources. TARGET CONTRACT An employer may introduce additional incentives into a contract by, offering, the contractor a bonus payment for the achievement of some previously defined target in terms of time cost or performance. Time or performance targets may be set in any type of contract. Thus, a contractor may earn a bonus for timely or early completion of the whole or some section of the Works, in addition to the normal contractual payment related to work completed. The achievement of key intermediate completion dates is particularly important in projects that involve a number of different contractors in the sequential installation and commissioning of process or manufacturing plant. A series of increasing bonuses tied to a sequence of key dates has been found to be a particularly successful form of incentive. MANAGEMENT CONTRACT When management contracting is used, the employer is creating a contractual and organisational system that is significantly different from the conventional approach. Management contracting is an arrangement where the employer appoints an external organisation to manage and co - ordinate the design and construction phases of a project. The management organisation does not normally execute any of the permanent works, but may provide specified common user and service facilities. The management contractor becomes a member of the employer's team and the employer's involvement in the project tends to increase. Management contracting is more closely related to a professional service than to a normal construction contract. TURNKEY OR PACKAGE DEAL CONTRACTS In the turnkey or package - deal contract, both detailed design and construction are undertaken by one organisation although parts of the design may be subcontracted to specialist consultants. The contractor carries most of the normal design and construction risks. Payment is generally on a lump sum basis, although this is often broken down into elements or phases of work. Payment is usually made in stages. The absence of a third party design organisation streamlines communications and avoids disputed responsibilities. Success is critically dependent on the employer stating his objectives, specifications, and needs timeously, systematically, and comprehensively. The employer is, however, exposed to risk arising from his weakness in negotiation as a result of changes that he may require. STRENGHTS AND WEAKNESSES For strengths and weaknesses of contract types please contact sblaauw@minalcon.com CHOICE OF CONTRACT TYPE For choice of contract types please contact sblaauw@minalcon.com