Klopper, C H (1986) An investigation into and evaluation of the cost reimbursable basis for building contracts. DSc thesis, University of Pretoria, South Africa.
Abstract
The rate of inflation which has remained in double figures since 1974, the higher cost of money, the increased competition amongst businessmen and the urgent establishment of strategic facilities have begun to exert more pressure on the building industry in the Republic of South Africa to accelerate the whole building process. Building projects have increased progressively in complexity and are often coupled with other substantial undefinable or unquantifiable risks. A strong probability exists that the influence of these circumstances causes unnecessary high building cost for the building public. Certain strategic choices by the employer regarding the organisational method, the type of contract and the tender procedure are necessary for the execution of a project. In the light of the aforementioned circumstances, the cost reimbursable basis for building contracts is proposed as a worthwhile alternative in certain cases. The proposed basis comprises a whole family of contracts of which the main characteristic is that the payment to the contractor consists of the reimbursement of "direct cost" by the employer plus a fee for overheads and profit. The selection of a contractor forms an integral part of the proposal and therefore this important matter also receives attention. In most conventional contracts the tender amount plays a decisive role and it is often the only criterium used to select a contractor. Attention is drawn to the fact that other attributes could sometimes be of equal or more importance and that it is thus desirable that these attributes be taken into account when selecting a contractor. The additional responsibilities which are placed on the shoulders of the professional team with the use of the cost reimbursable building contract are identified and the functions of the quantity surveyor in particular are examined. By making use of the utility theory and hypothetical case studies and by performing ex post facto research on available data on tenders, the conclusion is reached that the cost reimbursable basis for building contracts establishes a viable and meaningful contractual relationship which is especially suitable for use under certain circumstances, but possibly also for use on building projects generally.
| Item Type: | Thesis (Doctoral) |
|---|---|
| Uncontrolled Keywords: | South Africa; building contract; building process; case studies; competition; complexity; employer; inflation; overheads; payment; probability; professional; quantity surveyor; utility theory |
| Index terms: | proposal, profit, utility theory, competition, inflation, contractual relationship, complexity, building process, South Africa, direct cost, case study, building contract, quantity surveying, investigation, building industry, overheads |
| Subjects: | economics, economic theory, systems engineering, industry analysis, data collection methods, profession, Geography, building construction, market analysis, financial analysis, contract type, contractual relationship, economic analysis, project planning |
| Topics: | Contract Administration, Site Management, Roles and Professions, Research Practice, Cost Management, Business Strategy, Procurement, Project Management, Geographical Context, Engineering Principles |
| Descriptive scope: | 5 PCTEA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here