May 24, 2022

The Role of Civil Contractors in Construction Industry

Who Is A Civil Contractor?

Civil contracting is a branch of civil engineering, which deals with the design, construction and maintenance of both natural and man-made structures like roads, railways, airports, bridges, water reservoirs, tunnels, dams, sewer systems, etc. These structures also include pipelines used in plumbing and for conveying fluids over large distances. Civil works mean those works, which are built by civil engineers using, sophisticated or hand operated equipment’s in the real world. Civil works involves all those works mentioned above and includes buildings, both commercial and residential and hotels, malls, etc. A civil contracting company is one, that undertakes to construct the structures mentioned above. They do this in teamwork with architects, consultants and their own staff.

What Do Civil Contractors Do?

Invariably, civil engineers become civil contractors. Civil engineers are tasked with creating, improving, and protecting the built-in environment in which we all live. They are responsible for the planning, designing, construction, and maintenance of the building structures whether residential or commercial and infrastructure works such as roads, ports, railways, harbors, dams, power plants, irrigation projects, water, and sewerage systems, etc. Civil contractors work for their clients by drawing up a contract document with them. Normally, all the terms and conditions are first decided verbally and then they are crystallized in writing. Normally, in India, in most of the cases, the contract document, if made is just for the purpose of reference as a document for record.

In all construction contracts, the stronger party prevails over the weaker party. Although, the contract document specifies the terms of payment, the stronger party does not abide by it in totality. There are gaffes here and there, which result in disputes. In such instances, the contract document acts as a reference document. The contract document is normally created for long-term projects, which run for more than one year. For small projects, contract documents are normally not made. Here the terms and conditions are decided by a verbal understanding between the parties working on the project.

When a civil contractor is a small business entity, he does not press his client to make a contract document. In this case, he is surviving by fulfilling the requirement of his client who is a major builder. Once this minor contractor gets more work and consequently more money, he tends to become business with all his clients. He then decides to make a contract document with all his clients such that he does not suffer a loss of income. Normally, a loss of income results from the stronger party prevailing over the weaker party. When I talk of stronger and weaker, I mean the financial capability of the party executing the project.

Depending upon the type of verbal understanding the civil contractor has with his client, a contract may be of the type as noted under:

  • Lumpsum or Fixed Price contract
  • Measurement contract
  • Turnkey contract
  • Design and build contract
  • Cost Plus contract
  • Unit Price contract
  • Time and Material contract
  • Item rate contract

In a lump sum or fixed price contract, the total payout to the contractor remains constant. In case more items are introduced at a later stage of the project, then the contractor claims an extra amount again on a lump sum basis.

Measurement contract means a contract in which the work executed is duly measured in terms of units, which are predefined. Each item of work is measured using a measuring tape and a bill is generated. The client’s engineer then gives his approval to the measurement, after checking the bill.

There are others also, but they are beyond the scope of this article. Depending upon the type of contract drawn up, a civil contractor is designated. A lump sum contractor will take up contracts on a lump sum basis only and so on.