--- title: "Contract types in civil engineering; govt works" subject: "Construction Management" chapter: 5 key: "semester_8/construction_management:contract-types-government" source: https://www.bctengineer.com/q/semester_8/construction_management/contract-types-government site: BCT Engineering --- # Contract types in civil engineering; govt works Construction Management · Chapter 5: Contract Management - Asked in: 2065 Baisakh (old course) - Video: [What is the Contract ? | Type of Construction Contracts | Lump Sum Contract / Item Rate Contract](https://www.youtube.com/watch?v=q_7yASzaZuU) — The Institute of Construction Managment - Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14 - Page: https://www.bctengineer.com/q/semester_8/construction_management/contract-types-government - Whole chapter: https://www.bctengineer.com/md/semester_8/construction_management/chapter-5 ## Question Write the names of different types of contracts used in Civil Engineering. Which type of contract is used for Government works? Why? ## Short answer Civil engineering contracts include lump sum, item rate, percentage rate, cost plus, labour, turnkey/EPC, BOT, and management contracts. Government works in Nepal commonly use the item rate (unit price) contract because payment is for measured quantities, bids are comparable, variations are easy, and it is transparent for public audit. ## Answer #### Types of contract in civil engineering 1. Lump sum (fixed price) contract 2. Item rate (unit price, BOQ) contract 3. Percentage rate contract 4. Cost plus (reimbursable) contract: with percentage fee, fixed fee, or incentive fee 5. Labour contract 6. Turnkey / EPC / design-build contract 7. BOT / BOOT / BOO / BTO contracts 8. Construction management / management contract 9. Joint venture and sub-contract 10. Package, time-and-material, and force account (departmental) works #### Type used for government works The **item rate (unit price) contract** is the commonly used type for government works in Nepal, and the **lump sum** contract is used for small, well-defined works. Larger and special works use EPC or design-build contracts. #### Why - The contractors quote rates for each item in the BOQ and payment is made for the measured quantity actually done; so the client pays only for what is built, and the final cost follows the real quantity. - The design is completed before tender, and the quantities are estimated by the client's engineers, so the bids are comparable. - It is transparent for public audit and gives fair competition under the Public Procurement Act, 2063. - Variations are easily valued at the BOQ rates. - Risk of quantity error remains with the client, but the price risk is on the contractor. ## Check yourself The answer's key points as multiple-choice questions, with the correct option and why. 1. Which contract type is commonly used for government works in Nepal? A. Cost plus percentage contract B. BOT contract for all works C. Labour contract only D. Item rate (unit price) contract Answer: D. Item rate is common; lump sum is for small well-defined works. (Key point: Government contract type) 2. Why is the item rate contract suited to government works? A. Payment is on measured quantity, so the client pays only for what is built and bids are comparable B. Final cost is fixed and known at the start C. Contractor takes the risk of quantity errors D. No measurement or audit is needed Answer: A. Pay is on actual quantity; the client bears quantity risk, the contractor bears price risk. (Key point: Why item rate) 3. How are variations valued under item rate? A. At cost plus a fee B. At the BOQ rates C. Using a new lump sum each time D. They cannot be valued Answer: B. BOQ rates make variations easy to value. (Key point: Variations) 4. Which contracts are used for larger or special works? A. Percentage rate contracts only B. Force account only C. EPC or design-build contracts D. Item rate with no BOQ Answer: C. Large special works go to EPC/design-build; small defined ones to lump sum. 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