Obligations of a Contract

Unit-Price Contracts The general bearing of the obligations of the parties to each other is very similar to that in the case of the lump sum contract, except that here the totals of the quantities are often not determined until the finish of the work. Any effect that this uncertainty may have upon the interests of the parties will properly influence the contract prices on the one hand, or the con tractor's profit or loss on the other.

The case of structural steel work affords an excellent example of the workings of this fea ture upon the obligations and attitude of the parties. A great many steel structures are let upon the lump sum basis, and a very large num ber on that of the pound price. In either case the owner furnishes to the various bidders on the work plans and specifications in more or less detail, indicating the type, size, general strength, and character of construction. The bidders sub mit with their figures stress sheets, indicating how they propose to treat the various structural problems. On the basis of the quoted prices and the stress sheets submitted, a contractor is selected for the work, and a form of contract entered into with him. Before the work can be proceeded with, however, it is necessary that more elaborate detailed plans be prepared, and this is generally done by the contractor. He then proceeds along the lines indicated by the stress sheet. The details have to be approved by the owner's representative before actual con struction commences. Now, it is clear that the more pounds of metal in the structure under the form of contract that we are now discussing, the greater will be the contractor's profit; where as, the fewer the pounds of metal, the weaker the structure, and the less his profit. Since there are various ways of calculating the amount of metal necessary—column formulas, impact formulas, and various assumptions as to the performance of metal under stress made by different authori ties, each of which assumptions will have to do with the amount of metal for a given amount of supporting power—there will be room for a va riegated interpretation not only of the specifica tions but of the stress sheet; and it is the busi ness of the owner's representative, the architect or engineer, to see to it that the detailed draw ings do not call for an unnecessary amount of material at the owner's expense, while at the same time not imposing restrictions which will make the finished structure too weak. If the architect or engineer cut down the metal too much for agreement with the stress sheet, the contractor can very properly claim that he is entitled to sell the owner more material, on ac count of the provisions of the stress sheet, which then is a part of the contract.

In any steel structure, even with quite rigid specifications, there is room for the exercise of considerable judgment in designing the "con nections" whereby the stress is transmitted from one main number to another or others. Where it is to the contractor's interest to supply an excess of material, he will generally show a desire to adhere to the best and safest and most conservative engineering practice. There is, then, the further complication that the weights of the material as actually shipped are likely to vaxy several per cent from the theoretical weights of the members called for in the stress sheet. The contractor is usually paid on the basis of the actual shipping weight of the steel. This feature has been more fully discussed above, under the caption "Quantity of Work." The main distinction in the actual working results between the unit-price contract and the lump sum contract, is that in the former case the contractor demands the best engineering prac tice, whereas under the lump sum contract the owner is doing the fighting for good practice.

Cost plus Compensation Contract Much has been heard of late years about this kind of contract, and a good deal of work has been done under it. So much uncertainty seems to obtain in the minds of most people concerning its true inwardness, and there is such a consid erable diversity of opinion in the minds of differ ent people as to what this form of contract really means to the owner as well as to the contractor, that it would be well to go into its analysis with some care. Under its provisions the owner pays the entire cost of the work, plus something to the contractor for his profit. In some forms of this contract, the contractor furnishes the money as he goes along, and the owner reimburses him from time to time for what he has paid out until the end of the job, when a final settlement is made; while in other forms the contractor 0 K's all bills which are sent to the owner for payment, and the contractor does not handle any money at all. Even the pay-roll is settled by the owner sending his representative to the job on every pay-day and paying the men off on vouchers ap proved by the contractor or his representative.