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Such contracts are best suited for simple straightforward projects where the duration is short and variations are unlikely to occur. The drawbacks are that if several interim payments are required to be made during the construction, there is no mechanism to determine the amounts payable to the contractor unless stage or milestone payments are agreed upon. On the other hand if there are variations (changes to the works defined in drawings, specifications, etc.) there are no agreed points of references (rates) to price/evaluate variations. Therefore, in the event of a variation, the prices/rates will have to be agreed upon as and when variations occur or a schedule of rates may be incorporated into the contract for that purpose.
This contract describes they are no variations because contact is exclusive of quantities and payment is accepted at tender stage itself. For suppose there may be lot of variations because of change of design then how negotiate can be done in post contractual stage to speak strictly this contract arrangement should be proceed once design is completed, then only tendering is done. For which type of contracts you feel this type of contract holds good and when not to use.
If this type of contract is used for design & build how effective good results we can achieve. As we know in design & build contract , design will not be completed when entered in to tendering so detailed quantification is not possible. Best thing is we will arrive some lumpsum amount and variations can be adjusted towards elements and this act as better negotiate when there is uncertainty. But what about the cost of elements vary drastically from tendered design to completion design. How cost of elements can be adjusted in this scenario. Any allowances to be allowed for works of design not completed act as provisional sum.
Please share your views.
