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2.2.2 Employer's Participation

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Beyond appointing the Design Team, under the Traditional Contracting approach the Employer's participation usually also encompasses the following.

1 Approving the issuance of bidding documents, in which the Employer either takes on 100% of certain risks or shares those risks with the Contractor.

2 Allocating risk sharing – an example of where the Employer would usually accept the entirety of a risk is in respect of the subsoil proving to be of poor quality, leading to higher costs for the foundations. An example of a risk typically shared would be in regard to the occurrence of exceptionally bad weather, where the Contractor would be entitled to extra time for completing the work but for which no monetary compensation would be payable to the Contractor. However, the Contractor would be relieved of the responsibility for paying Liquidated Damages for delayed completion due to this occurrence.

3 Arranging separately for certain key materials, goods and/or equipment to be supplied and/or installed by entities other than the Contractor.

4 Reviewing commercial bids received from construction companies for building what the Design Team's drawings and specifications show, where the Contractor's price is often based on the bills of quantities that are provided by the Employer's Team.

5 Awarding the Project implementation work to the bidder considered to be offering the best deal to the Employer (usually the lowest price, provided that the time-frame for completion is acceptable to the Employer).

Practical Risk Management for EPC / Design-Build Projects

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