risk bearing 1.
(3) it is beneficial to the construction period and can speed up the construction progress.
For fixed total price construction contracts, the contract price is basically the project cost.
With the implementation of the civil code, the Supreme People’s court also issued the interpretation of the Supreme People’s Court on the application of law in the trial of disputes over construction contracts of construction projects (I) (FA Shi [2020] No.
(4) it can reduce the owner’s financial cost.
State owned companies with government background prefer to sign fixed price construction contracts for the following reasons: (1) controllable investment and convenient settlement.
It should be noted that the fixed price construction contract is different from the fixed unit price construction contract.
The fixed total price construction contract is adopted.
Generally, the fixed total price construction contract can be considered when there are the following circumstances: (1) the project scope is clear, the project design is detailed and in place, the drawings are complete and clear, and the contractor can calculate the specific quantities according to the design drawings; (2) due to small quantities, short construction period and low total price of the project, it is estimated that there is little change in various conditions during the project construction, the project conditions and material market price are relatively stable, the risk can be predicted and controlled, and there is no obvious difference from the description in the bidding document (if any); (3) the engineering structure and technology are simple, generally few or no new technologies and processes are adopted, the risk is small, and the quotation estimation is convenient; (4) the bidding period is relatively abundant, and the contractor has sufficient time to investigate the site, review the quantities, analyze the bidding documents and calculate the project quotation.
For the owner, the fixed total price construction contract basically determines the total investment of the construction project at the time of signing, which is beneficial to the investment control.
The parties to the contract shall agree on the risk range included in the fixed total price and the calculation method of risk cost in the special conditions of contract for construction contract, and agree on the adjustment method of contract price other than risk.
The fixed unit price construction contract refers to the contract in which the total contract price is calculated by multiplying the agreed fixed price per unit quantity by the actually completed quantities.
The civil code and the new judicial interpretation have also made provisions on the fixed total price construction contract.
It can be directly transferred to the operation mode to accelerate profitability.
25, hereinafter referred to as the “new judicial interpretation”), replacing the previously issued Three judicial interpretations related to construction projects: the reply of the Supreme People’s Court on the priority of compensation for construction project price (FSH [2002] No.
The settlement price of the fixed unit price construction contract = unit price × Actual completed quantities + other visa costs not included in the quantities.
This paper will analyze the problems related to the settlement of the fixed total price construction contract in combination with these provisions and relevant judicial practice.
The adjustment caused by market price fluctuation shall be subject to Clause 11.1 (adjustment caused by market price fluctuation) of the construction contract Adjustments due to changes in law shall be implemented in accordance with Clause 11.2 (adjustments due to changes in law).
definition a fixed total price construction contract refers to a construction project construction contract in which the parties to the contract agree to calculate, adjust and confirm the contract price based on the construction drawings, priced bill of quantities or budget and relevant conditions.
In order to reduce the risk of material fluctuation, the contractor will take the initiative to speed up the construction progress and strive to complete the project as soon as possible.
(5) the settlement cycle can be reduced.
16), the interpretation of the Supreme People’s Court on the application of law in the trial of construction contract dispute cases of construction projects (FSH [2004] No.
For government investment projects, progress is an important assessment indicator, and even some projects must be completed and delivered at a certain time node.
Therefore, the owner’s risk is very small and mainly bears the risk of force majeure and the risk specified in the contract..
During the preparation of quotation, the risk of engineering quantity calculation error and material price change during construction shall be transferred to the contractor.
14) Interpretation of the Supreme People’s Court on the application of law in the trial of disputes over construction contracts of construction projects (II) (FSH [2018] No.
2.
20).
The price calculation of the fixed total price construction contract is based on the drawings, regulations and specifications, the project tasks and contents are clear, the owner’s requirements and conditions are clear, and the total contract price is wrapped at one time, which will not change due to the change of environment and the increase or decrease of quantities; The price calculation of fixed unit price construction contract is based on the actual settlement of quantities after the fixed unit price is determined according to the current drawings, bidding documents and technical data, and the total contract price will change with the change of quantities.
Overview of fixed total price construction contract I.
Once the total contract price is agreed, it is not allowed to be adjusted unless the owner (employer) increases or decreases the quantities Design changes or price adjustment conditions specified in the contract, in which “total contract price” refers to the total price for the contractor to complete the quantities within the scope of the contract and all work implemented to complete the quantities.
At present, the government investment mainly solves the capital problem by bank financing.
2、 Applicable circumstances # 1.
With the fixed total price construction contract, the owner can withdraw cash relatively accurately and timely to reduce the financial cost.
According to this definition, the settlement price of fixed total price construction contract = all change / visa prices + total contract price.
III.
(2) low risk.
After the fixed unit price contract project is completed, it needs settlement audit to determine the project cost, and the period is long.
After completion, there is no need for settlement or the settlement time is very short.
When submitting quarterly or annual investment statements, it is convenient and concise with high accuracy, and there is no need to further refine and calculate.
After the bank gives the credit line, the withdrawal time and amount directly determine the interest and other expenses to be paid.
The fixed total price construction contract is adopted.
