The Contractor is a person or firm that undertakes a contract to provide materials or labour to perform a service or do a job.
There are three major parties engaged in each construction project:
- the owner,
- the contractor,
- as well as the management team.
A building contractor is always responsible for planning and coordinating construction activities, as well as ensuring that the project is completed on time and within budget.
There are different types of contractors for each specific work, as every project requires different skills and execution standards.
In the Construction industry, contractors are responsible for the entire construction phase, as well as selecting the most effective techniques to complete the project according to the specifications.
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What Is A Contractor?
The word “contractor” is derived from a legal agreement between the owner and the builder, which typically involves a formal contract.
The contractor is an organisation or, in some instances, a person engaged by a client to carry out the work that is necessary to complete the project.
The contractors, on the other hand, don’t always have the skills or trades required to complete all construction work on their own. As a result, they are generally responsible for hiring subcontractors to execute specific sections of a project. In most cases, the construction project will engage a large number of subcontractors.
The contractor’s position is multifaceted as they are responsible for a variety of activities. It is challenging to carry out a project from a set of drawings to a finished building without the help of a group of various types of contractors, except for small construction projects.
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Types Of Contractors
Large construction projects often require the involvement of multiple contracting firms to be completed.
Many different categories of contractors may be on the site simultaneously, conducting the same task in various locations.
Even a simple residential house project may require the involvement of one or more contractors, as well as subcontractors, before the job is certified as complete.
There are many different types of contractors in the construction industry, each with its particular specialisation as follows:
1. Trade Contractor
A trade contractor is a subcontractor that specialises in a specific aspect of a construction project.
The trade contractors perform a wide range of tasks in various locations, including repair, renovation, and construction.
In the construction industry, the term trade contractor can refer to a variety of jobs, including electricians and plumbers, both of which are relatively common. Every registered trade contractor focuses on a distinct area of expertise.
Several types of contractors specialise in the installation of ventilation, heating, and air conditioning systems, as well as other related services related to managing a building’s temperature and environment.
Some are more concerned with establishing building safety systems. Sprinklers, Alarm systems, and attention to the building’s fire rules are examples of these systems.
2. Management Contractor
Management contracting is a procurement approach in which a management contractor contracts with multiple work contractors to perform the task.
The client often appoints the management contractor early in the design phase so that their expertise can be applied to improving both the cost and buildability of concepts as they develop, and also provide packaging advice and assess risks associated with interfaces.
3. Approved Contractor
The types of contractors have proved that they possess the knowledge, ability, resources, and desire to tender for the project.
4. Prime Contractor
The prime contractor is indeed the project’s main contractor. The prime contractor, also known as the general contractor, is responsible for all aspects of a project and works on it continuously throughout its duration.
The project must be completed on time and within budget. They employ and lead other contractors, referred to as subcontractors, although they are not better than them.
When a project owner doesn’t want to get directly engaged or needs someone with more expertise than a project manager, they can employ a prime contractor to handle the project’s leadership and coordination.
Several of its responsibilities are equivalent to those of the project manager, such as maintaining work on time.
5. Work Package Contractor
The specialist contractor focuses on specific aspects of maintenance, as well as replacement work.
For example, Servicing specialist installation includes building management networks as well as fuel installations, finishes and fittings, structure, building fabric, furniture and equipment maintenance, grounds maintenance activities, and landscape management, or labour only.
These types of contractors can always be hired immediately by the Employer or through the Maintenance Contractor, based on the contract approach.
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6. Integrated Supply Team
The phrase “integrated supply team” refers to the integration of the entire supply chain engaged in a project’s delivery.
The main contractor, subcontractors, designers, facility managers, suppliers, and other stakeholders may be involved.
The phrase “integrated supply team” varies from “integrated project team” in that the former refers mainly to the principal contractor as well as their supply chain (subcontractors, designers, suppliers, and so on). At the same time, the latter includes a client with, if applicable, a project manager.
7. Design And Build Contractor
The design and build is a procurement approach in which the main contractor is selected to design as well as execute the works, as opposed to a standard contract where the client chooses experts to design and develop, and later engages the contractor to complete the job.
These types of contractors are responsible for both the design and the construction of a project.
8. Design, Build, And Manage Contractor
The contractor is hired not only to design and construct the works but also to manage them during operation, often providing operational support in addition to building maintenance, including staff, cleaning, and other related services.
9. Sub-contractor
The subcontractor is a contractor engaged by the general contractor’s main contractor or prime contractor to complete a specific task as part of a larger project, and is generally paid for the activities supplied to the project by the original general contractor.
The subcontractor is a business or individual that performs work for another firm as part of a larger project.
The subcontractors perform activities that the contractor is unable to complete but remains responsible for under the company’s contract.
The subcontractors are not part of the firm; you do not even monitor or control them, provide them with directions on how to perform their tasks, or have line management duties over them.
These types of contractors can be hired as fixed-term contracts, task-based contracts with no defined end date, or for lengthy projects.
10. Domestic Subcontractor
The domestic subcontractor is a subcontractor that works with the main contractor to provide or repair materials or products, as well as to perform work that is a portion of the main contract.
Because construction has become more complex and specialised, new construction methods have been developed, and firms are increasingly common for contractors to subcontract to subcontractors instead of hiring a large workforce directly.
11. Construction Manager
Construction managers are responsible for overseeing and leading a variety of construction projects from start to finish.
A construction manager is usually hired earlier in the design phase so that their knowledge can be applied to optimise the cost as well as the constructability of projects as they develop, and to provide guidance on packaging, package interface hazards, and trade contractor selection.
Construction managers are responsible for establishing and maintaining schedules, monitoring funds, and ensuring that all tasks are performed daily.
Construction managers typically establish and maintain numerous working relationships within a construction site, ensuring a safe and hazard-free workplace.
12. Nominated Subcontractor
The consumer chooses the nominated subcontractor to complete specified sections of the project, which is forced on the main contractor, and the main contractor has no control over who the selected subcontractor can be.
Thus, the employment of nominated subcontractors creates a direct contractual connection between the consumer and the subcontractor.
The main contractor may still benefit from the use of nominated subcontractors on site, but must provide ‘presence,’ which often includes the supply of water, electricity, restrooms, and other essential supplies, to enable the nominated subcontractor to complete their work.
13. Named Subcontractor
The named subcontractor works in the same manner as a domestic subcontractor, as well as a subcontractor whose contracts with the main contractor involve carrying out aspects of the job after being selected from a list of acceptable contractors identified by the client.
Although they were initially recommended for the contract, the named subcontractor is ultimately employed by the main contractor, not the client.
Naming a subcontractor allows the client to have greater involvement in who the main contractor selects as a subcontractor, while maintaining the element of choice and the responsibility of assessing their progress.
This is considered an excellent alternative to nominating subcontractors, particularly because nominated subcontractors are no longer available under several contract types.
14. Works Contractor
Management contracting is a procurement approach in which the activities are performed by several separate work contractors who are contracted to the management contractor.
The management types of contractors are mostly employed early in the design phase so that their expertise can be utilised to improve the cost and buildability of projects as they progress, and to provide packaging advice.
Management contracting differs from construction management in that management contractors handle activities directly with the contractors, whereas construction managers oversee trade contracts, which the client arranges.
As principal contractors are responsible for controlling safety and health hazards throughout the construction process, they must have the necessary knowledge, skills, experience, and organisational capabilities to carry out the work.
15. Principal Contractor
In a project involving multiple types of contractors, the primary contractor is responsible for overseeing the construction process. The client (commercial or domestic) appoints them in a contract to plan, manage, monitor, and coordinate safety and health throughout this period.
16. Supplier Contractor
The broad phrase refers to an individual who provides services or goods to a client or another supplier within the supply chain. Typically, suppliers are thought to be companies that offer physical supplies, including materials, goods, and plants.
In construction projects, the term “supplier” refers to any firm that is engaged to contribute to the delivery of the built asset.
17. Specialist Contractor
The suppliers of specialised aspects of the project usually contribute to the design. Specialised parts that are properly designed in detail by their manufacturers or installers must be included in development plans.
Lifts, cladding systems, escalators, refrigeration units, switchgear, air conditioning systems, heating, ventilation, and cleaning cradles are examples of such items.
In such circumstances, it is sometimes advisable to secure this expert design before offering a supply contract, so that it can be correctly integrated into the entire design and no delays or adjustments are required.
Responsibility Of Contractor
- The contractor is responsible for designing, planning, executing, monitoring, and inspecting a building construction project in general. Regardless of the project’s scope, responsibility remains from the beginning to the end.
- A contractor is responsible for providing all necessary materials, labour, machinery, and other items required to complete the task as specified in the contract.
- The contractor must complete the work in accordance with the plans, specifications, and the engineer’s instructions.
- Before beginning any new item or covering up any work, the contractor should notify the supervising engineer.
- On the worksite, the contractor should appoint a skilled person to whom instructions and directions can be given.
- The contractor must follow all applicable labour rules and make timely payments to both their workers and subcontractors.
- Throughout the execution of a work, the contractor is responsible for any harm to individuals or surrounding properties.
- A contractor should provide all necessary support to the engineer in determining the work lines and levels.
- When necessary, the contractor must submit the bills of work.
- The contractor is responsible for the security of all workers and staff on the work site and should provide them with safety clothing, such as safety shoes and helmets.
Conditions of Contract in the Construction Industry
The following are some essential terms and conditions of contracts in the construction Industry:
1. Security Deposit
Upon acceptance of the tender, the contractor must deposit 10% of the amount as security money with the department, which includes the earnest money already deposited.
This amount is held as a check to ensure the contractor fulfils all terms and conditions of the contract, carries out the works satisfactorily according to the specifications, maintains the job’s progress, and completes the job on time.
A typical clause cap can be framed as follows.
The contractor shall (within ten days of the receipt of the notification of the acceptance of his tender) deposit with the owner while making cash (usually the amount is 1% of the cost of the work) and permits the owner while making any payment due, to deduct 10% of all money so payable until the full amount of security deposit specified in the tender is made up.
The security deposit, when paid in cash, deducts 10% of the total amount payable until the full amount of the security deposit specified in the tender is made up. The security deposit referred to when paid in cash may, at the cost of the contractor, be converted into interest-bearing securities provided the contractor has expressly desired this in writing.
Suppose the amount of the security deposit to be paid in a lump sum within the specified period above is not paid. In that case, the tender that has already been accepted shall be considered cancelled, and legal steps shall be taken against the contractor to recover damages. The security deposit lodged by the contractor shall be refunded to him after the expiry of six months from the date on which the final bill is paid.
However, in large projects, security is often provided in the form of bank guarantees. Because if the contractor is required to pay SD in cash, they are bound to include the interest on the amount deposited in their tendered rates or costs. The bank guarantee incurs a small percentage cost for the contractor.
Seldom exceeding two per cent per annum of the amount guaranteed, with a small margin of money. Accepting the security in the form of a bank guarantee is thus to the employer’s advantage. These are key conditions of a construction contract.
2. Compensation for Delay
There is a provision for compensation for delay in the conditions of the construction contract. The time allowed for completion of the work is a key aspect of the contract on the part of the contractor.
When the work allotted to the contractor remains uncommenced or there is a delay in completion of the work, or if the progress of the work is not proportionate to the time elapsed. The contractor shall pay compensation as an amount equal to 1% or such a small amount as the superintending delay engineer may decide for each day of delay, subject to a maximum of 10% of the tendered amount for the whole work.
The decision of the superintending engineer, in writing, as to the quantum of compensation to be levied, shall be final.
3. Extension in Time Limit
These conditions of the contract in construction are intended to indicate the circumstances under which an extension of the time limit may be granted to the site contractor by the owner.
A typical clause can be framed as follows:
If the progress of the work is delayed by the owner or by the engineer or by any reason which is beyond the control of the contractor, such as strikes, fire, etc., or any other cause that, in the opinion of the engineer, is justified for the extension, the time of completion shall be suitably extended as decided by the engineer.
It is the contractor’s responsibility to report such hindrances to the engineer in charge. They can then apply for an extension of time in writing to the engineer in charge within 7 days of the completion date. The engineer in charge may grant such an extension of time on reasonable grounds.
4. Completion Certificate
Upon completion of the work, including the removal of surplus materials and any other materials related to the work, the contractor shall be furnished with a completion certificate by the engineer in charge.
The date of completion shall be noted in the measurement book according to the date certified in the certificate.
5. Payment on Certificate
The contractor shall be entitled to receive a monthly payment for bills submitted to a cost exceeding Rs. 5000, provided they are duly approved and passed by the engineer in charge. The engineer’s certificate of the sum shall be final and conclusive.
But all such intermediate payments shall be regarded as an advance against the final payment and not as payment for work done.
6. Work at Night and on Holidays
There are conditions in the construction contract that State that No Work shall be done at night, on Sundays, or on any other holiday without the written permission of the engineer in charge.
7. Inferior Materials and Workmanship
This clause is provided to reject the materials and workmanship that do not conform to the specifications of the work.
These conditions of the contract in construction may be written as:
All materials and workmanship which, in the opinion of the engineer in charge, do not conform to the provisions made in the specifications of the works shall be
Rejected materials shall be suitably marked on the site and shall be removed to a suitable distance at once, at the contractor’s demand, by an engineer. All
Condemned workmanship shall be rectified, repaired, or replaced by the contractor for the satisfaction of the engineer in charge.
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8. Departmental Materials
Departmental materials are issued to a contractor on a contract basis, at a fixed issue rate as specified in the tender.
The value of the full quantity of materials supplied may be deducted from sums then due or thereafter to become due to the contractor under the contract or from the security deposit.
These conditions of the contract in construction specified that,
All construction materials given to the contractor are the absolute property of the government and shall not, on any account, be removed from the site of the work and shall at all times be open to inspection by the engineer in charge or his authorised persons.
9. Extra Items and Their Payments
A contractor shall execute items not covered under this contract after obtaining a written order from the engineer in charge. Commencement of such work shall not in any way violate the terms and conditions of the original agreement.
The engineer-in-charge shall determine and fix the rate of the extra items by comparing and studying the rates of suitable items mentioned in the contractor’s tender, or by conducting a rate analysis.
No extension of the time limit shall be granted due to the execution of extra items unless recommended by the engineer in charge.
10. Measurement and Payment to Contractor
The measurements of all items under this contract shall be taken by the engineer in charge or their representative, in accordance with standard practice, using the standard model of measurement for building works.
The contractor shall submit a bill in printed form on or before the twentieth (20th) of each month of work executed in the previous month. The bill of work shall be prepared in accordance with the rates specified in the tender.
If the contractor has submitted a bill for payment as above, the engineer-in-charge shall, no later than the first month, issue a payment certificate to the contractor.
The amount payable shall be 90% of the sum obtained by applying tendered rates to actually measured quantities of the approved work completed by the contractor during the preceding month.
11. Commencement of Work According to Drawing and Specifications
All works shall be carried out in accordance with the design, drawings, and specifications, and all materials in every respect shall be in strict accordance with the specifications.
The contractor shall be entitled to access all drawings, specifications, and designs as specified above during the office hours for inspection.
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12. Additions and Alterations
The engineer in charge reserves the right to make any change in, omission from, or any additions or alterations to the original designs. Drawings and specifications are necessary for the engineer-in-charge to provide an opinion during the progress of the work. They may be provided to him in writing, signed by the engineer-in-charge.
Such charges, omissions, and substitutions shall be deemed to have formed as work included in the original tender, and the contractor shall be bound to carry out the work. The time of completion shall be extended proportionately by the engineer-in-charge due to the above reasons.
13. Subletting
To guard against the behaviour of the subcontractors appointed by the main contractor, this clause is included in the conditions of the construction contract.
The clause should provide for two crucial points,
- Written permission to appoint subcontractors is to be obtained from the owner.
- The main contractor is to be considered responsible for the work as a whole.
The clause of subletting may read as follows.
The contract shall not be sublet or assigned to others without the prior written approval of the owner. In the event the contractor assigns or sublets their contract or attempts to do so, the owner may, by written notice, rescind the contract.
In the event of a Contract, it shall thereupon forfeit and be absolutely at the disposal of the owner.
Moreover, in such a case, the owner has the full right to take the remedy, take possession of the premises and all the materials, tools, and appliances thereon, and finish the work by whatever method he may deem expedient. The contractor shall not be eligible for any payment until the job is completed.
If the unpaid balance of the contract price shall include the expense of completing the work, such excess shall be paid to the contractors. If the fees or costs of completing the work exceed the unpaid balance, the contractor shall pay the difference to the owner. The engineer’s certificate regarding the expense for completing the work shall be final.
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14. Breach of Contract
If a contractor fails to fulfil their contractual obligations, the owner must have the right to claim damages for breach of contract.
However, such damages will not always be an adequate remedy, and provisions must be made to ensure the work is completed.
In the event of abandonment of the work due to bankruptcy or liquidation, serious illness, or the contractor’s death, or any other cause, the owner shall have the power to adopt any of the following courses as they may deem best suited to their interests.
i) To rescind the contract.
ii) To take over and complete the work as an agent of the contractor.
The owner shall have the right to employ labour and supply materials to carry out the work, or any part thereof, debiting the contractor with the cost of the labour and the price of the materials, and crediting him the value of the work done, at the same rates as if the contractor had carried it out under the terms of the contract.
The owner shall also have the right to take possession of and use, or permit the use of, all tools, plants, materials, and stores provided by the contractor for the execution of the work, paying or allowing for the same in accounts at the contract rates or the current market rates.
The contractor shall not remove tools, plants, materials, or other items from the site without the written permission of the owner.
The engineer in charge shall determine the cost of all work done by the owner acting as the contractor’s agent. In such cases, the certificate assigned to the engineer-in-charge shall be confirmed and conclusive against the contractor.
When the breach of contract is on the part of the owner, the contractor has the right to abandon the work and bring an action for damages.
15. Labour Laws
The contractor agrees that he shall have to respect the provisions of the labour laws which are in force from time to time, and the contractor shall be responsible for all claims, compensations, etc, occurring under the provisions of such labour laws.
The work on behalf of the Architect and the contractor is supposed to provide them with full cooperation and assistance to perform their duties well.
The clerk of works shall be a qualified competent person to the satisfaction of the Architect or Engineer. He shall be appointed and paid regularly by the owner as per the recommendation of the architect. The contractor shall provide the Clerk of Works with every facility and assistance necessary for inspecting the works and materials, including checking and measuring the time and materials. However, subject to this clause, the contractor shall receive the instructions only from the engineer or Architect.
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16. Compensation in Case of Bad Work
If any work is found to have been executed by the contractor with unsound, imperfect, or unskillful workmanship or with inferior materials, or if it does not follow the contract, the contractor shall make good the defects in work at his own expense and remove the materials or articles complained of in writing by the Engineer-in-charge.
Furthermore, suppose the contractor fails to do so within the period specified by the engineer in charge. In that case, the contractor shall be liable to pay compensation at the rate of one per cent per day, up to a maximum of 10 per cent of the estimated amount. If the contractor fails to rectify the defects or remove and replace the defective materials, the same may be done at the contractor’s risk and cost.
17. Maintenance Period
The contractor shall be responsible for any damage or defects noticed within the prescribed maintenance period of 3 months (or 6 months in the case of road work). The work shall, as soon as practicable after the expiration of the maintenance period, be handed over to the engineer in charge in good and perfect condition.
Suppose any damages, defects, or imperfections become apparent in it from the date of commencement until the end of the maintenance period. In that case, the contractor shall make good the same at their own expense. Alternatively, in the event of default, the engineer in charge shall be entitled to carry out such work by other workmen and deduct the cost from any sums due to the contractor or from their security deposit.
The security deposit of the contractor shall not be refunded before the expiry of the maintenance period or till the final bill has been prepared and passed, whichever is later.
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Summary On The Contractor
During the various phases of construction, Different types of contractors play a variety of roles, each with its own set of responsibilities.
Daily, contractors should be able to manage uncertainty and make informed decisions.
The contractor’s record is also crucial because those with more experience may be better equipped to respond to frequent project challenges successfully.
FAQs On The Contractor
What are the Types Of Contractors?
The following are the types of Contractors
- Trade Contractor
- Management Contractor
- Approved Contractor
- Prime Contractor
- Work Package Contractor
- Integrated Supply Team
- Design and Build Contractor
- Design, Build, and Manage Contractor
- Subcontractor
- Domestic Subcontractor
- Construction Manager
- Nominated Subcontractor
- Named Subcontractor
- Works Contractor
- Principal Contractor
- Supplier
- Specialist Contractor
What is a Trade Contractor?
A trade contractor is a subcontractor that specialises in a specific aspect of a construction project.
The trade contractors perform a wide range of tasks in various locations, including repair, renovation, and construction.
What are the Conditions of the Contract?
The Following are the contract conditions used in construction
1. Security Deposit (An Important Condition of the Contract)
2. Compensation for delay
3. Extension in Time Limit
4. Completion Certificate
5. Payment on Certificate
6. Work at Night and on Holidays
7. Inferior Materials and Workmanship
8. Departmental Materials
9. Extra Items and Their Payments
10. Measurement and Payment to Contractor
11. Commencement of Work According to Drawing and Specifications
12. Additions and Alterations
13. Subletting
14. Breach of Contract
15. Labour Laws
16. Compensation in Case of Bad Work
17. Maintenance Period
What Is a Contract?
A contract is an undertaking or agreement by a person or firm to do any construction work or activity under specific terms and conditions. The conditions of the construction contract use these terms.
These works may be of different natures, such as construction, maintenance, and repairs, the supply of materials, the supply of labour, or the transport of materials.
“A contract is one type of agreement which can be enforced by law.”
To make this contract or agreement valid, there must be a definite offer, and there must also be equally definite and unconditional acceptance of this offer.
We hope this article helped you learn about The Contractor | Types, Responsibilities, and Conditions You Need To Know. You may also want to learn about Concrete |Definition, Ingredients, and Curing You Should Know, Reinforced Cement Concrete, 12 Most Expensive Colleges /Universities In The World, and 16 Different Types of Concrete You Should Know Right Now.
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