The prime contract is the start of the construction contract’s hierarchical chain. It is from this contract that subcontracts and sub-subcontracts are derived as well as many of the related secondary contracts discussed in Chapter 1. All construction-related prime contracts are not the same, or even necessarily similar, although as pointed out in Chapter 2, they all contain the three essential elements of offer, acceptance, and consideration that are fundamental to their formation.
What are the generic types of construction-related prime contracts, and what are the major distinguishing features between them? This chapter examines these questions from the standpoint of the identity of the contracting entities, the nature of the contractual services provided, and the commercial terms under which these contracts operate.
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Construction-related prime contracts involve owners, architect/engineers, construction managers, and construction contractors. In each case, the owner typically contracts with one of the others, depending on the particular purpose to be accomplished by the contract.
Owner-Architect Contracts and Owner-Engineer Contracts
As discussed in Chapter 1, architect/engineers (A/Es) are entities that typically design projects, prepare drawings and specifications for the construction contract, and in some instances perform field inspection services and administration of the construction contract. Architectural firms and engineering firms provide similar types of services. The difference between them is that architects deal with residential, commercial, and institutional buildings, whereas engineering companies deal with engineered structures such as highways, dams, bridges, tunnels, and heavy industrial buildings and structures. Prime contracts between owners and architects are called owner-architect contracts, whereas such contracts with engineers are called owner-engineer contracts.
Owner-Construction Manager Contracts
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Construction managers (CMs) are distinctly different entities from A/Es. Their role is to manage the construction aspects of a project on behalf of the owner, usually as the owner’s agent. A prime contract between an owner and a construction manager is called an owner-CM contract.
Owner-Contractor Contracts
The fourth and final construction-related prime contract party is the construction contractor, the actual builder who determines the means, methods, techniques, sequence, and procedures and directs the actual construction operations. Contracts between owners and construction contractors are called owner-contractor contracts.
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