{"id":3750,"date":"2020-01-17T14:08:55","date_gmt":"2020-01-17T14:08:55","guid":{"rendered":"https:\/\/htmas.eu\/?page_id=3750"},"modified":"2020-01-30T08:50:32","modified_gmt":"2020-01-30T08:50:32","slug":"project-contracting-system","status":"publish","type":"page","link":"https:\/\/www.htmas.eu\/sk\/project-management\/project-contracting-system\/","title":{"rendered":"Project contracting system"},"content":{"rendered":"<div class=\"wpb-content-wrapper\"><!-- CWS Row --><div class=\"cws-content clearfix\"><div class=\"vc_row wpb_row vc_row-fluid\"><div class=\"wpb_column vc_column_container vc_col-sm-12 cws-column\"><div class=\"cws_vc_column-inner\"><div class=\"wpb_column vc_column_container vc_col-sm-12\"><div class=\"vc_column-inner\"><div class=\"wpb_wrapper\"><div class=\"cws_spacing\"><div class=\"cws_spacing cws_spacing_default\" style=\"height:70px;\"><\/div><\/div><\/div><\/div><\/div><!-- CWS Column --> <\/div><\/div><\/div><\/div><!-- CWS Row --><div class=\"cws-content clearfix\"><div class=\"vc_row wpb_row vc_row-fluid vc_row-o-equal-height vc_row-flex\"><div class=\"wpb_column vc_column_container vc_col-sm-4 vc_col-has-fill vc_col-has-padding cws-column\"><div class=\"cws_vc_column-inner vc_custom_1579267312560\"><div class=\"wpb_column vc_column_container vc_col-sm-4 vc_col-has-fill\"><div class=\"vc_column-inner vc_custom_1579267312560\"><div class=\"wpb_wrapper\">\n\t<div  class=\"wpb_single_image wpb_content_element vc_align_center wpb_content_element vc_custom_1579267824073\">\n\t\t\n\t\t<figure class=\"wpb_wrapper vc_figure\">\n\t\t\t<div class=\"vc_single_image-wrapper   vc_box_border_grey\"><img loading=\"lazy\" decoding=\"async\" width=\"600\" height=\"386\" src=\"https:\/\/www.htmas.eu\/wp-content\/uploads\/2020\/01\/Industrial_Development.jpg\" class=\"vc_single_image-img attachment-full\" alt=\"\" title=\"Industrial_Development\" srcset=\"https:\/\/www.htmas.eu\/wp-content\/uploads\/2020\/01\/Industrial_Development.jpg 600w, https:\/\/www.htmas.eu\/wp-content\/uploads\/2020\/01\/Industrial_Development-300x193.jpg 300w\" sizes=\"auto, (max-width: 600px) 100vw, 600px\" \/><\/div>\n\t\t<\/figure>\n\t<\/div>\n<div class=\"cws_spacing\"><div class=\"cws_spacing cws_spacing_default\" style=\"height:20px;\"><\/div><\/div><div  class=\"vc_wp_custommenu wpb_content_element industrial-menu\"><div class=\"widget widget_nav_menu\"><div class=\"menu-industrial-development-menu-container\"><ul class=\"menu\"><li class=\"menu-item menu-item-type-post_type menu-item-object-page menu-item-3737\"><a href=\"https:\/\/www.htmas.eu\/sk\/industrial-development\/\">Priemyseln\u00fd rozvoj<\/a><\/li>\n<li class=\"menu-item menu-item-type-post_type menu-item-object-page menu-item-has-children menu-item-3753\"><a href=\"https:\/\/www.htmas.eu\/sk\/project-management\/\">Project Management<\/a>\n<ul class=\"sub-menu\">\n\t<li class=\"menu-item menu-item-type-custom menu-item-object-custom menu-item-has-children menu-item-3754\"><a href=\"#\">For investors<\/a>\n\t<ul class=\"sub-menu\">\n\t\t<li class=\"menu-item menu-item-type-post_type menu-item-object-page menu-item-3755\"><a href=\"https:\/\/www.htmas.eu\/sk\/project-management\/why-to-read-these-pages\/\">Why to read these pages<\/a><\/li>\n\t\t<li class=\"menu-item menu-item-type-post_type menu-item-object-page menu-item-3756\"><a href=\"https:\/\/www.htmas.eu\/sk\/project-management\/project-contracting-system\/\">Project contracting system<\/a><\/li>\n\t<\/ul>\n<\/li>\n\t<li class=\"menu-item menu-item-type-custom menu-item-object-custom menu-item-has-children menu-item-3757\"><a href=\"#\">For managers<\/a>\n\t<ul class=\"sub-menu\">\n\t\t<li class=\"menu-item menu-item-type-post_type menu-item-object-page menu-item-3770\"><a href=\"https:\/\/www.htmas.eu\/sk\/why-to-cooperate\/\">Why to cooperate<\/a><\/li>\n\t\t<li class=\"menu-item menu-item-type-post_type menu-item-object-page menu-item-3771\"><a href=\"https:\/\/www.htmas.eu\/sk\/what-the-project-is\/\">What the project is<\/a><\/li>\n\t\t<li class=\"menu-item menu-item-type-post_type menu-item-object-page menu-item-3774\"><a href=\"https:\/\/www.htmas.eu\/sk\/project-management-2\/\">Project Management<\/a><\/li>\n\t\t<li class=\"menu-item menu-item-type-post_type menu-item-object-page menu-item-3773\"><a href=\"https:\/\/www.htmas.eu\/sk\/project-management-site-list\/\">Project Management Site List<\/a><\/li>\n\t<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul><\/div><\/div><\/div><div class=\"cws_spacing\"><div class=\"cws_spacing cws_spacing_default\" style=\"height:30px;\"><\/div><\/div><\/div><\/div><\/div><!-- CWS Column --> <\/div><\/div><div class=\"wpb_column vc_column_container vc_col-sm-8 vc_col-has-padding cws-column\"><div class=\"cws_vc_column-inner vc_custom_1579273331521\"><div class=\"wpb_column vc_column_container vc_col-sm-8\"><div class=\"vc_column-inner vc_custom_1579273331521\"><div class=\"wpb_wrapper\"><div class='cws_textmodule cws_vc_shortcode_module' id='cws_textmodule_6a0d4d391fbfd'><div class='cws_textmodule_wrapper'><div class='cws_textmodule_text text_align_left'><div class='cws_textmodule_titles display_block'><h2 class='cws_textmodule_title'><span>Project contracting system<\/span><\/h2><\/div><div class='cws_textmodule_content'><div class='text_content_wrapper'><p>.. rather, how the contracting system influences the very project realization, rights and duties of the client and contractor.<\/p>\n<p>All following considerations and suggestions are elaborated following existing experience with various investors and with various demands on their projects realizations. In this part, I would like to mention advantages and disadvantages of separate contracting systems and I\u2019ll also try to recommend investors the best system for their projects realization.<\/p>\n<p><strong class=\"motto\">CONTRACTING SYSTEMS VARIANTS<\/strong><\/p>\n<ol>\n<li>&#8211; Variant A .. General contractor \u2013 \u201cturn-key\u201d contracting with concluded Contract of Work<\/li>\n<li>&#8211; Variant B .. General contracting with Contract of Work based on \u201ccost + fee\u201d<\/li>\n<li>&#8211; Variant C .. Engineering services with Consignment Agreement<\/li>\n<li>&#8211; Variant D .. Engineering services with Contract of Mandate<\/li>\n<\/ol>\n<p>Summary and partition of engineering services for separate variants.<\/p>\n<p>&nbsp;<\/p>\n<div style=\"overflow-x: auto;\">\n<table id=\"reference-hm2\">\n<tbody>\n<tr class=\"zahlavi\">\n<th rowspan=\"2\">Operation characteristics<\/th>\n<th colspan=\"2\">Variant A<\/th>\n<th colspan=\"2\">Variant B<\/th>\n<th colspan=\"2\">Variant C<\/th>\n<th colspan=\"2\">Variant D<\/th>\n<\/tr>\n<tr>\n<td class=\"sub\">Inv<\/td>\n<td class=\"sub\">Con<\/td>\n<td class=\"sub\">Inv<\/td>\n<td class=\"sub\">Con<\/td>\n<td class=\"sub\">Inv<\/td>\n<td class=\"sub\">Con<\/td>\n<td class=\"sub\">Inv<\/td>\n<td class=\"sub\">Con<\/td>\n<\/tr>\n<tr>\n<td class=\"title\">Project management<\/td>\n<td>&#8211;<\/td>\n<td>P<\/td>\n<td>C<\/td>\n<td>P<\/td>\n<td>C<\/td>\n<td>P<\/td>\n<td>P<\/td>\n<td>P*4<\/td>\n<\/tr>\n<tr>\n<td class=\"title\">Tender documentation preparation and general tenders provisions commercial part technical part<\/td>\n<td>A*1<br \/>\nPoC<\/td>\n<td>P<br \/>\nP<\/td>\n<td>A*1<br \/>\nA*1<\/td>\n<td>P<br \/>\nP<\/td>\n<td>A<br \/>\nA<\/td>\n<td>P<br \/>\nP<\/td>\n<td>P<br \/>\nA<\/td>\n<td>&#8211;<br \/>\nP<\/td>\n<\/tr>\n<tr>\n<td class=\"title\">Bids evaluation and choosing of a contractor<\/td>\n<td>&#8211;<\/td>\n<td>P<\/td>\n<td>A*1<\/td>\n<td>P<\/td>\n<td>A<\/td>\n<td>P<\/td>\n<td>P<\/td>\n<td>P*2<\/td>\n<\/tr>\n<tr>\n<td class=\"title\">Conclusion of treaties<\/td>\n<td>&#8211;<\/td>\n<td>P<\/td>\n<td>A*1<\/td>\n<td>P<\/td>\n<td>A<\/td>\n<td>P<\/td>\n<td>P<\/td>\n<td>&#8211;<\/td>\n<\/tr>\n<tr>\n<td class=\"title\">Construction management including time schedule and budget control<\/td>\n<td>&#8211;<\/td>\n<td>P<\/td>\n<td>C<\/td>\n<td>P<\/td>\n<td>C<\/td>\n<td>P*4<\/td>\n<td>P<\/td>\n<td>P*4<\/td>\n<\/tr>\n<tr>\n<td class=\"title\">Engineering supervision<\/td>\n<td>&#8211;<\/td>\n<td>P<\/td>\n<td>C<\/td>\n<td>P<\/td>\n<td>C<\/td>\n<td>P<\/td>\n<td>C<\/td>\n<td>P<\/td>\n<\/tr>\n<tr>\n<td class=\"title\">Invoice control, payments remittance<\/td>\n<td>C<\/td>\n<td>P*4<\/td>\n<td>C<\/td>\n<td>P*6<\/td>\n<td>P<\/td>\n<td>C<\/td>\n<td>P<\/td>\n<td>A*3<\/td>\n<\/tr>\n<tr>\n<td class=\"title\">Complex tests<\/td>\n<td>PoC<\/td>\n<td>P<\/td>\n<td>C<\/td>\n<td>P<\/td>\n<td>P<\/td>\n<td>P*4<\/td>\n<td>P<\/td>\n<td>PoC*1<\/td>\n<\/tr>\n<tr>\n<td class=\"title\">Trial operation<\/td>\n<td>PoC<\/td>\n<td>P<\/td>\n<td>P<\/td>\n<td>P*4<\/td>\n<td>P<\/td>\n<td>PoC<\/td>\n<td>P<\/td>\n<td>PoC*1<\/td>\n<\/tr>\n<tr>\n<td class=\"title\">Complaint procedure<\/td>\n<td>PoC<\/td>\n<td>P<\/td>\n<td>A<\/td>\n<td>P<\/td>\n<td>P<\/td>\n<td>P*4<\/td>\n<td>P<\/td>\n<td>*5<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>Inv = Investor, Con = contractor of engineering works, according to separate variants<\/p>\n<div id=\"list\">\n<ol class=\"left\">\n<li>P \u2013 provides<\/li>\n<li>A \u2013 approves<\/li>\n<li>C \u2013 controls<\/li>\n<li>PoC \u2013 participation of competences<\/li>\n<\/ol>\n<ol class=\"right\">\n<li>*1 \u2013 in demanded range only<\/li>\n<li>*2 \u2013 technical part only<\/li>\n<li>*3 \u2013 correspondency with realization only<\/li>\n<li>*4 \u2013 in delegated range of competence only<\/li>\n<li>*5 \u2013 only for works provided by contractor or paid technical service<\/li>\n<li>*6 &#8211; based on previous remittance from investor<\/li>\n<\/ol>\n<\/div>\n<p>&nbsp;<\/p>\n<p><strong class=\"motto\">Variant A \u2013 General contractor \u2013 \u201cturn-key\u201d contracting with concluded Contract of Work<\/strong><\/p>\n<p>The investor signs an agreement for whole project realization provision with General contractor that is an Engineering company \u2013 by means of \u201cturn-key\u201d realization.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/htmas.eu\/images\/graf1.png\" alt=\"turn key model\" width=\"445\" height=\"183\" \/><\/p>\n<p>We call this model a \u201cturn-key\u201d model. This model is favoured by financially strong investors for whom the model provides adequate convenience and confidence in their project realization at the cost of certain capital expenditures increase. The general contractor\u2019s responsibility is the complete construction control, including the financial flow control, separate contractor\u2019s selection and concluding of contractual relations with them. The Investor has only one contractual relation \u2013 with the general contractor and he isn\u2019t in a position of dealing separately with the subcontractors.<\/p>\n<p>It is important to realize that the Investor isn\u2019t in a position to gain surveillance over the actual investment price and therefore, this model enables the Engineering Company to achieve above standard profits. Indeed, this risk is partly eliminated by implementation of tenders for General contractor but in any case, the total price will be higher than in a system following variant B.<\/p>\n<p>On the other hand it is important to realize that this model offers the best guarantees for the Investor. The General contractor undertakes complete guarantees toward the Investor in a range agreed in the Contract of Work. In case of the necessity of some extra expenses that are higher than the ones stated in the agreements with separate contractors, the General contractor is liable for these payments and the Investor is guaranteed against them. So-called Reserve fund is created by the General contractor for this purpose \u2013 in an amount of about 10-15% of total investment volume of the Engineering Company.<\/p>\n<p>At this contracting system, the Investor may examine the investment amount thoroughly, before the Contract of Work is signed. In case of a properly concluded agreement and clear Investor\u2019s requirements confirmed by his signature, this model sets complete and, above all, final price of the project at the very beginning.<\/p>\n<p><strong class=\"motto\">Variant B \u2013 General contracting with Contract of Work based on &#8220;cost + fee&#8221;<\/strong><\/p>\n<p>The Investor signs the contract of the complete project realization, securing the \u201cturn-key\u201d with the General contractor which is an Engineering company. The difference with the previous system is in the reimbursement method and in the work guarantee provision.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/htmas.eu\/images\/graf1.png\" alt=\"turn key model\" width=\"445\" height=\"183\" \/><\/p>\n<p>General contractor obligations:<\/p>\n<ul>\n<li>To elaborate and to terminate the complete project\/construction in agreed term<\/li>\n<li>To realize the complete project\/construction for arranged and approved limit price<\/li>\n<li>To provide guarantees for the overall quality of the realized project\/construction including every controlled supply (by the General contractor) and to provide guarantees for the technology operation if the General contractor is the technology bearer<\/li>\n<\/ul>\n<p>This model \u2013 compared to the Consignment agreement \u2013 delegates more decisions on the General contractor about how to use the sources for project securing. In the scope of works of the General contractor the documentation elaboration is also in agreed amounts. The Investor has only one contractual relationship \u2013 with the General contractor and he isn\u2019t in a position of dealing separately with the subcontractors.<\/p>\n<p>In this instance, the price is set according to the figure \u201ecost + fee\u201c, that means:<\/p>\n<p><strong class=\"motto\">TC = DC + Fee + R<\/strong><\/p>\n<p>where<\/p>\n<ol>\n<li>TC = total project cost, the price between the Investor and the General contractor<\/li>\n<li>DC = direct costs of separate deliveries, equipment, services<\/li>\n<li>Fee = fixed approved fee for engineering for the General contractor<\/li>\n<li>R = approved reserve for extra work, changes, risks, etc. connected with the project realization, usually in the range of about 5%<\/li>\n<\/ol>\n<p>At this cost, the General contractor is not obliged to take serious measures for risks elimination and that reduces the total construction costs. The Investor always controls the actual construction costs in this system of financing. The General contractor can\u2019t make above standard profits, therefore it is common to conclude an incentive contract for contractual bonus achievable in case of the construction\u2019s compliance or decrease of the set construction costs.<\/p>\n<p>The General contractor is responsible for coordinating all the works, general engineering solutions and he also guarantees for the whole Work. The Investor has to comprehend that in this model, the General contractor guarantees for all the works and deliveries up to the guarantees from the separate contractors. In case of a necessity to pay for some extra costs that are higher than the sums agreed on with the individual contractors, the means from the set reserve are used. In case that it is necessary to pay for the costs that are higher than the responsibility of separate contractors is, means from set reserve are used<\/p>\n<p><strong class=\"motto\">Variant C \u2013 Engineering services with Consignment Agreement<\/strong><\/p>\n<p>Commission agent \u2013 Engineering company organizes and controls the project in its own name for account of the Investor &#8211; Principal.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/htmas.eu\/images\/graf2.png\" alt=\"turn key model\" width=\"445\" height=\"220\" \/><\/p>\n<p>All contractors (of equipment, works and services) are chosen by the Investor in terms of the Engineering company recommendation, the separate contracts are then concluded between the Engineering company and the contractor, but the payments to contractors are realized directly from the Investor\u2019s account. The guarantees for supplies (claims) are provided by the contractors directly to the Investor who usually entrusts the Engineering Company and this company ensures any removal of faults from the separate contractors. In this realization system the Engineering company bears more guarantees for terms and total investment costs than in Variant D.<\/p>\n<p><strong class=\"motto\">Variant D \u2013 Engineering services with Contract of Mandate<\/strong><\/p>\n<p>This model is very similar to the previous model, but here the Mandatary \u2013 Engineering Company organizes and controls the project in the name of Mandant\u00b4s \u2013 Investor\u2019s and on its account.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/htmas.eu\/images\/graf3.png\" alt=\"turn key model\" width=\"445\" height=\"201\" \/><\/p>\n<p>This model requires considerable experience of the Engineering company with control and coordination of the project, it is difficult in terms of administration, project logistics and individual steps discussion with the Investor. In this model it is also appropriate for the Investor to have at least an elementary knowledge of capital projects realizations and that he is conscious of all risks that it undertakes.<\/p>\n<p>Usually, there are two contracts concluded between the Investor and the Engineering company \u2013 the Contract of Work for designing and the Contract of Mandate for engineering.<\/p>\n<p>This model is suitable for an Investor who wants to realize a project with maximum possible control and minimal costs. The Investor participates actively in the operation and he can influence it directly while the project is in construction.<\/p>\n<p>All contractors of equipment and works are chosen by the Investor in terms of references from the Engineering company, individual contracts are concluded between the Investor and the contractor. Project organization and work realization is though fully controlled by the Engineering company, but the Investor keeps general responsibility for the costs and project realization.<\/p>\n<p>It isn\u2019t possible to apply a general guarantee for the entire work, each contractor is a bearer only of guarantees for its own supplies. The contractor bears all guarantees directly towards the Investor, it means that the Investor objects his complaints at the contractor\u2019s.<\/p>\n<p><strong class=\"motto\">GENERAL EVALUATION AND RECOMMENDATION FOR INVESTORS<\/strong><\/p>\n<p>I\u2019m aware of the fact that it isn\u2019t easy to set some explicit rules about what type of system is the best to use for a given situation, it is necessary to discuss in detail each Investor\u2019s decision separately. Yet, I\u2019ve tried to mention a few remarks about this subject and to specify some borders for the decision making:<\/p>\n<ul class=\"insid\">\n<li>The first chart shows that Variant A needs the highest financial investment but it is also the most convenient variant for the Investor, on the other hand Variant D is the cheapest but the most difficult for the Investor<\/li>\n<li>The more you direct from Variant A to Variant D, the more work you will have and, probably, the lower your investment will be<\/li>\n<li class=\"insid\">The word \u201cprobably\u201d is important here because the Variant D may become the most expensive one when the Investor is unprofessional or when its knowledge isn\u2019t sufficient<\/li>\n<li class=\"insid\">What are the guarantees: Here it is important to realize \u2013 what does this word mean to you? \u2026 What importance do you attach to it? It is important to take this question into consideration when deciding between Variant A and B<\/li>\n<li>Investment amount, another interesting factor for decision-taking<\/li>\n<li class=\"insid\">Huge investments, in milliards SKK\/CZK are better to be realized in the system of the Variant A or B<\/li>\n<li class=\"insid\">Smaller investments, when a possible failure is easily eliminated by corporation business, are better to be realized by means of the Variant C or D<\/li>\n<li>It is important to take into consideration the knowledge of local market, experience with contractors<\/li>\n<li class=\"insid\">Absolute unacquaintance with local market = Variant A or B<\/li>\n<li class=\"insid\">Good knowledge of local situation, experience with contractors already gained from the realization of previous investments = Variant C or D<\/li>\n<\/ul>\n<p>It is possible to write a lot of recommendations about the system selection. In any case, the Investor has to understand the importance of his decision and, most importantly, the possible consequences of a wrong decision. The managers of our company are experienced in dealing with these problems, therefore we recommend you to turn to the professionals who will be happy to help you.<\/p>\n<\/div><\/div><\/div><\/div><\/div><div class=\"cws_spacing cws_spacing_size_sm_desctop-on cws_spacing_tablet-on cws_spacing_mobile-on\"><div class=\"cws_spacing cws_spacing_default\" style=\"height:20px;\"><\/div> <div class=\"cws_spacing cws_spacing_size_sm_desctop\" style=\"height:20px;\"><\/div> <div class=\"cws_spacing cws_spacing_tablet\" style=\"height:20px;\"><\/div> <div class=\"cws_spacing cws_spacing_mobile\" style=\"height:20px;\"><\/div><\/div><\/div><\/div><\/div><!-- CWS Column --> <\/div><\/div><\/div><\/div><!-- CWS Row --><div class=\"cws-content clearfix\"><div class=\"vc_row wpb_row vc_row-fluid\"><div class=\"wpb_column vc_column_container vc_col-sm-12 cws-column\"><div class=\"cws_vc_column-inner\"><div class=\"wpb_column vc_column_container vc_col-sm-12\"><div class=\"vc_column-inner\"><div class=\"wpb_wrapper\"><div class=\"cws_spacing\"><div class=\"cws_spacing cws_spacing_default\" style=\"height:100px;\"><\/div><\/div><\/div><\/div><\/div><!-- CWS Column --> <\/div><\/div><\/div><\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"Industrial Development Project Management For investors Why to read these pages Project contracting system For managers Why to cooperate What the project is Project Management Project Management Site List Project contracting system.. rather, how the contracting system influences the very project realization, rights and duties of the client and contractor. All following considerations and suggestions are elaborated following existing experience with various investors and with various demands on their projects realizations. In this part, I would like to mention advantages and disadvantages of separate contracting systems and I\u2019ll also try to recommend investors the best system for their projects realization. CONTRACTING SYSTEMS VARIANTS &#8211; Variant A .. General contractor \u2013 \u201cturn-key\u201d contracting with concluded Contract of Work &#8211; Variant B .. General contracting with Contract of Work based on \u201ccost + fee\u201d &#8211; Variant C .. Engineering services with Consignment Agreement &#8211; Variant D .. Engineering services with Contract of Mandate Summary and partition of engineering services for separate variants. &nbsp; Operation characteristics Variant A Variant B Variant C Variant D Inv Con Inv Con Inv Con Inv Con Project management &#8211; P C P C P P P*4 Tender documentation preparation and general tenders provisions commercial part technical part A*1 PoC P P A*1 A*1 P P A A P P P A &#8211; P Bids evaluation and choosing of a contractor &#8211; P A*1 P A P P P*2 Conclusion of treaties &#8211; P A*1 P A P P &#8211; Construction management including time schedule and budget control &#8211; P C P C P*4 P P*4 Engineering supervision &#8211; P C P C P C P Invoice control, payments remittance C P*4 C P*6 P C P A*3 Complex tests PoC P C P P P*4 P PoC*1 Trial operation PoC P P P*4 P PoC P PoC*1 Complaint procedure PoC P A P P P*4 P *5 Inv = Investor, Con = contractor of engineering works, according to separate variants P \u2013 provides A \u2013 approves C \u2013 controls PoC \u2013 participation of competences *1 \u2013 in demanded range only *2 \u2013 technical part only *3 \u2013 correspondency with realization only *4 \u2013 in delegated range of competence only *5 \u2013 only for works provided by contractor or paid technical service *6 &#8211; based on previous remittance from investor &nbsp; Variant A \u2013 General contractor \u2013 \u201cturn-key\u201d contracting with concluded Contract of Work The investor signs an agreement for whole project realization provision with General contractor that is an Engineering company \u2013 by means of \u201cturn-key\u201d realization. We call this model a \u201cturn-key\u201d model. This model is favoured by financially strong investors for whom the model provides adequate convenience and confidence in their project realization at the cost of certain capital expenditures increase. The general contractor\u2019s responsibility is the complete construction control, including the financial flow control, separate contractor\u2019s selection and concluding of contractual relations with them. The Investor has only one contractual relation \u2013 with the general contractor and he isn\u2019t in a position of dealing separately with the subcontractors. It is important to realize that the Investor isn\u2019t in a position to gain surveillance over the actual investment price and therefore, this model enables the Engineering Company to achieve above standard profits. Indeed, this risk is partly eliminated by implementation of tenders for General contractor but in any case, the total price will be higher than in a system following variant B. On the other hand it is important to realize that this model offers the best guarantees for the Investor. The General contractor undertakes complete guarantees toward the Investor in a range agreed in the Contract of Work. In case of the necessity of some extra expenses that are higher than the ones stated in the agreements with separate contractors, the General contractor is liable for these payments and the Investor is guaranteed against them. So-called Reserve fund is created by the General contractor for this purpose \u2013 in an amount of about 10-15% of total investment volume of the Engineering Company. At this contracting system, the Investor may examine the investment amount thoroughly, before the Contract of Work is signed. In case of a properly concluded agreement and clear Investor\u2019s requirements confirmed by his signature, this model sets complete and, above all, final price of the project at the very beginning. Variant B \u2013 General contracting with Contract of Work based on &#8220;cost + fee&#8221; The Investor signs the contract of the complete project realization, securing the \u201cturn-key\u201d with the General contractor which is an Engineering company. The difference with the previous system is in the reimbursement method and in the work guarantee provision. General contractor obligations: To elaborate and to terminate the complete project\/construction in agreed term To realize the complete project\/construction for arranged and approved limit price To provide guarantees for the overall quality of the realized project\/construction including every controlled supply (by the General contractor) and to provide guarantees for the technology operation if the General contractor is the technology bearer This model \u2013 compared to the Consignment agreement \u2013 delegates more decisions on the General contractor about how to use the sources for project securing. In the scope of works of the General contractor the documentation elaboration is also in agreed amounts. The Investor has only one contractual relationship \u2013 with the General contractor and he isn\u2019t in a position of dealing separately with the subcontractors. In this instance, the price is set according to the figure \u201ecost + fee\u201c, that means: TC = DC + Fee + R where TC = total project cost, the price between the Investor and the General contractor DC = direct costs of separate deliveries, equipment, services Fee = fixed approved fee for engineering for the General contractor R = approved reserve for extra work, changes, risks, etc. connected with the project realization, usually in the range of about 5% At this cost, the General contractor is not obliged to take serious measures for risks elimination and that reduces the total construction costs. The Investor always controls the actual construction costs in this system of financing. The General contractor can\u2019t make above standard profits, therefore it is common to conclude an incentive contract for contractual bonus achievable in case of the construction\u2019s compliance or decrease of the set construction costs. The General contractor is responsible for coordinating all the works, general engineering solutions and he also guarantees for the whole Work. The Investor has to comprehend that in this model, the General contractor guarantees for all the works and deliveries up to the guarantees from the separate contractors. In case of a necessity to pay for some extra costs that are higher than the sums agreed on with the individual contractors, the means from the set reserve are used. In case that it is necessary to pay for the costs that are higher than the responsibility of separate contractors is, means from set reserve are used Variant C \u2013 Engineering services with Consignment Agreement Commission agent \u2013 Engineering company organizes and controls the project in its own name for account of the Investor &#8211; Principal. All contractors (of equipment, works and services) are chosen by the Investor in terms of the Engineering company recommendation, the separate contracts are then concluded between the Engineering company and the contractor, but the payments to contractors are realized directly from the Investor\u2019s account. The guarantees for supplies (claims) are provided by the contractors directly to the Investor who usually entrusts the Engineering Company and this company ensures any removal of faults from the separate contractors. In this realization system the Engineering company bears more guarantees for terms and total investment costs than in Variant D. Variant D \u2013 Engineering services with Contract of Mandate This model is very similar to the previous model, but here the Mandatary \u2013 Engineering Company organizes and controls the project in the name of Mandant\u00b4s \u2013 Investor\u2019s and on its account. This model requires considerable experience of the Engineering company with control and coordination of the project, it is difficult in terms of administration, project logistics and individual steps discussion with the Investor. In this model it is also appropriate for the Investor to have at least an elementary knowledge of capital projects realizations and that he is conscious of all risks that it undertakes. Usually, there are two contracts concluded between the Investor and the Engineering company \u2013 the Contract of [...]","protected":false},"author":3,"featured_media":0,"parent":3742,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"class_list":["post-3750","page","type-page","status-publish","hentry"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Project contracting system - HTMAS s.r.o.<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.htmas.eu\/sk\/project-management\/project-contracting-system\/\" \/>\n<meta property=\"og:locale\" content=\"sk_SK\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Project contracting system - HTMAS s.r.o.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.htmas.eu\/sk\/project-management\/project-contracting-system\/\" \/>\n<meta property=\"og:site_name\" content=\"HTMAS s.r.o.\" \/>\n<meta property=\"article:modified_time\" content=\"2020-01-30T08:50:32+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/htmas.eu\/images\/graf1.png\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Predpokladan\u00fd \u010das \u010d\u00edtania\" \/>\n\t<meta name=\"twitter:data1\" content=\"10 min\u00fat\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.htmas.eu\/project-management\/project-contracting-system\/\",\"url\":\"https:\/\/www.htmas.eu\/project-management\/project-contracting-system\/\",\"name\":\"Project contracting system - 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