Advantages and disadvantages of contracts

Nit kkr

1. GROUPMRMBER
1.ArmanKMeena(12111088)
2. Mukesh Dukiya (12111089)
3. Hitesh (12111090)
Advantages And Disadvantages
OfVariousTypesOfContracts
SUBMITTEDTO
Prof.PratibhaAgarwal

2. CONTENT
1.AdvantagesandDisadvantagesofTurnKeyContracts
2.AdvantagesandDisadvantagesofLumpPlusContracts
3.Advantages and Disadvantages of Measurement Contracts
4.AdvantagesandDisadvantagesofCostPlusContracts
5.AdvantagesandDisadvantagesofMaterial&TimeContracts
6. AdvantagesandDisadvantagesofGuaranteedMaximumPrice (GMP)

3. ADVANTAGES
1.Reducedblamingandfingerpointing.
2.Reducedmanagement efforts.
3.Reducedcost overrun.
4.Risktransference.
TURNKEYCONTRACTS
DISADVANTAGES
1.Dependentontrustprojectowner.
2.During construction, unexpected challenges or complications
canleadtocostoverrunsonturnkey projects.
3.Thecontractorisliableforany defectsorissuesthat ariseduring
thebuildingprocess.
4.Itisthecontractor’sresponsibilitytodelivertheprojecttothespecified
standards,sotheclientlimitedcontroloverquality.

4. ADVANTAGES
1.Lowriskonthe owner,higher risktothe contractor.
2.Costknownat outset.
3.Contractorwillassign bestpersonnel.
4.Contractorselectioniseasy.
LUMPSUMCONTRACTS
DISADVANTAGE
1.Changesisdifficultandcostly.
2.Contractor is free to use the lowest cost ofmaterial,equipmentand
methods.
3.The contractor carriesmuchofthe risks.The tenderedpricemayincludehighrisk
contingency.
4.Competentcontractorsmaydecidenot tobidto avoida high-risk lumpsumcontract.

5. DISADVANTAGES
1.Potential for Disputes.
2.Increased Administrative Effort.
3.Cost Uncertainty for Clients.
4.Incentive for Contractors to Increase Quantities.
5.Potential for Slower Progress.
1.Measurement contracts provide flexibility to accommodate changes in
design or scope during the project.
2.Fair Payment.
3.Encourages Accurate Work Measurement.
4.Accommodates Uncertainty.
ADVANTAGES
MEASUREMENT CONTRACTS

6. ADVANTAGES
1.Provides transparency in cost breakdown.
2.Encourages collaboration between client and
contractor.
3.Flexibility for adjustments during project changes.
DISADVANTAGES
1.Limited cost control for the client.
2.Potential for contractor inefficiency due to guaranteed
payment.
3.Increases the risk of disputes over incurred costs.
COST PLUS CONTRACTS

7. TIME AND MATERIAL CONTRACTS
ADVANTAGES
1.Easy to create.
2.Risk is shared between the client and the contractor.
3.Seller has no incentive to control costs.

DISADVANTAGES
1.Good for resource augmentation assignments where cost risk is
shared by buyer and seller.
2. Requires monitoring of daily output- Good for small projects only.

8. GUARANTEED MAXIMUM PRICE (GMP)
DISADVANTAGES
1.Complex Negotiation and Administration.
2.Limited Contractor Flexibility.
3.Risk of Disputes.
ADVANTAGES
1.The primary benefit of a GMP contract is that it establishes a maximum
price for the project.
2.Reduced Financial Risk for Owners.
3.GMP contracts can provide more certainty and stability in financial
planning compared to other contract types.
4.GMP contracts often promote a collaborative relationship between the owner
and the contractor.

9. THANK YOU