Types of Construction Contracts
Construction contracts are often classified by how the price is determined and how risks are allocated. Use the interactive tool below to explore the differences.
Contract Risk Allocator
Select a contract type to see how risk is distributed between the Owner and the Contractor.
Owner RiskContractor Risk
80%
Cost OverrunsProfit Certainty
Pros
- Budget certainty for Owner
- Simpler contract administration
- Incentivizes Contractor efficiency
Cons
- Higher contingency in bid price
- Disputes over change orders
- Potential quality compromises
"Best used for: Projects with well-defined scope and complete drawings."
Contract Documents
Hierarchy of Contract Documents
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Liquidated Damages
Liquidated Damages Calculator
In government infrastructure projects (RA 9184), liquidated damages are typically set at 1/10 of 1% of the cost of the unperformed portion for every day of delay. Once the cumulative amount reaches 10% of the contract amount, the procuring entity may rescind the contract.
Damages per Day (0.1%):₱10,000
Total Liquidated Damages:₱150,000
10% Maximum Threshold:₱1,000,000
Example
Problem:
A contractor is delayed by 20 days on a PHP 15,000,000 government infrastructure project. Calculate the total liquidated damages.
Liquidated Damages Calculation
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Liquidated Damages: Max Limit Rescission
Example
Problem:
A contractor is delayed by 150 days on a PHP 25,000,000 commercial building project. The contract follows standard government conditions (RA 9184 IRR) where the maximum threshold for damages is . Calculate the liquidated damages and determine if the contract can be rescinded.
Advanced Liquidated Damages
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Liquidated Damages: Unfinished Portion Calculation
Example
Problem:
A contractor finishes a PHP 50,000,000 highway project, but leaves a small PHP 2,000,000 section uncompleted. The project is delayed by 30 days. The contract specifies that liquidated damages are applied only to the cost of the uncompleted portion for every day of delay. Calculate the damages.
Proportional Damages Calculation
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