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Answered Same Day Jul 20, 2020


Meenal answered on Jul 23 2020
139 Votes
The government of Australia came up with a proposal to construct a bio-diversity park spanning 457 acres in New South Wales, Australia. It should feature a display of about 500 varieties of 80 species of fruit yielding plants along with various ecosystems. The park should be completed by 2024. Hence the government hired APIC CONSULTANTS to select the best project delivery system, financial contract type and procurement method for the project.
Project delivery:
1. Design Bid Build:
Although this delivery system results in minimum total cost of construction, but it pose some threats as well. Since this type of system is primarily based on lowest price, the contractor is not always very qualified, takes time in getting familiar with the designing team and gaining trust of his team members. Sometimes a delay in the selection of a contractor delays the construction starting time thereby resulting in a much longer time to finish the project than anticipated.
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2. CM@risk:
This system nullifies the abovementioned risks but is very time consuming, since it needs a large number of subcontractors for different types of work and requires the construction manager to keep a fair account for overhead costs and report contingencies, if any.
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3. Design build:
The best project delivery system now a days is the design build system where a general contractor undertakes all responsibility of the project from start to finish, render designs, keeps a check on the costs incu
ed and deliver the completed project right on time.
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Financial contracts:
1. Lump Sum contract:
In this type of financial contract, the entire risk is on the contractor. The cost of construction to the customer remains the same. In a lump sum contract, the contractor undertakes to deliver the stated services for a predetermined price. In case the labor and material costs increase the contractor’s profits decrease. However if the contractor incurs a lower actual cost of labor and materials, his profits rise. This type of financial contract is suitable if the project requirements and deadlines are prefixed so that the contractor can co
ectly evaluate the final cost of the project.
2. Cost plus fixed fee:
Here the compensation is made by reimbursing the actual cost of materials and labour to the contractor in addition to a fixed amount other than the actual costs, that is mutually agreed upon by the contractor and customer.
3. Guaranteed Maximum Price:
In this type of financial contract, the contractor is reimbursed for the actual cost of...

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