Though apartment culture has picked up in most of the metros
and a large number of people live in apartments, if option is given to the
people while investing their money on residential property, a large number of
people prefer to purchase plots and get the house constructed according to
their taste and style instead of buying an apartment or ready built house.
However, it would be a difficult task for the owner to get his
house constructed from a contractor unless every minute care is taken by him to
protect his interest. The deed of construction should be a well thought over document
and should contain all the terms and conditions explicitly stated. Thefollowing are the some general guidelines which may be of some help while enteringinto a construction contract.
Before undertaking construction of a house, the property
owner has to plan out his requirements and the method he has to adopt for
successful completion of construction after taking into consideration the
various options available for him. He has to select a building contractor after
market survey, enter into a written construction contract putting forth all the
terms and conditions in an unambiguous manner which shall be signed by both the
owner and the contractor. To avoid disputes and misunderstandings, doubts and
confusion, the terms and conditions should be clearly mentioned in simple
language in the deed of contract. The contract should be drawn up with theminute details and should be to the point.
Basically, the terms of the contract should contain details
of the parties involved, quality of the materials to be used, time frame within
which the different phases of construction of the house are to be completed,
schedule and mode of payment, escalation clauses, penalty terms, liability of
the parties, authority for appointment of sub-contractors, if any, source of supply
of construction materials, specifications of fixtures and fittings to beprovided in the house, provision for inspection by the owner or his agent or
representative of the progress of construction and the quality of materials
used, authority who shall decide the quality of the material used,
compensation, if any to be paid for the loss of life and for the body injury
for the labour force while at work, arbitration clause etc.
It is the normal practice that the contractor shall submit
his quotation after he goes through the specifications and the quality of materials
required for construction. The quotation should clearly mention the make, brandand other particular specifications of the materials to be used. The owner
should make sure that the base rates for the tiles utilized, granite, marble,
lights, tubes, glass, pipes, windows, grills, basins etc are mentioned separately.
It may be kept in mind that the cost of construction is normally quoted on
square foot basis and the structural and working drawings prepared by the architect
will be the basis of the contractor's quotations. It is better to get thequotation on item rate basis for the fittings, fixtures and furnishings.
Broadly, there are two ways of awarding the construction
contract - Construction on a turn key basis and construction on the basis of a
labour contract.
For construction under turnkey method, the entire constructionwork is assigned to the contractor / builder, including providing of fittings and
fixtures and the building so constructed would be delivered by the contractor / builder
to the owner only upon the total work is executed and the house is ready for
occupation. The contractor / builder shall be collecting the agreed sum from the
owner as per the terms of agreement at different intervals as and when the work
progresses and the final instalment due shall be collected at the time of
handing over of the house or after a lapse of certain period after handing over
of the building to the owner. Under this type of contracts, a two part contractis referable. The first part pertains to the type and quality of structure that
is to be built while the second part relates to the type and quality of
fittings, fixtures and furnishings to be pro- vided by the contractor.
There
is, however, an option available to the owner to purchase the type and quality
of material of his choice than agreed upon while entering into a construction
contract. For example, as far as flooring is concerned, it could be granite,
marble or tiles and the owner is entitled to reduction from the total contracted
sum payable to the builder for the materials supplied by him. For instance, if
the base rate quoted for the marble is Rs.150 per sq.ft for a 600 sq ft area,
and the owner desires to choose a better quality marble or wood flooring he can
purchase it and then get reduction from the sum due to the contractor. He canapply a similar strategy for other items such as fittings, fixtures and furnishings.
For construction under labor contract method, a laborcontract agreement is entered into between the owner and the contractor. Under
this system, the property owner shall make arrangements for regular and systematic
supply of all the materials required by the contractor at different stages of
construction while the contractor shall utilize the material so supplied for construction
of the house through his labour. This method would be preferable where highquality of construction is expected since the property owner shall take minutecare to select the material of his choice for being used in the construction.
Under this method, the owner will be able to get his house constructed keeping in
mind his budget, needs, resources and tastes. In both the methods of contract,
the property owner should be vigilant and should visit the construction site as
frequently as possible to set right the deficiency if any the progress of
construction.
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