Streamline your sales contract management for construction industry

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hello and welcome again now regarding contract subcontract and purchase order what is the difference and here as we saw in the previous lecture we have an employer or the owner or the client and he needs to hire an engineer to do the design and he needs to hire an engineer also to do the supervision so this employer has to issue a contract to this engineer a contract to the engineer for the design or the supervision or both of them so an employer can have an a contract with a design consultant and another contract with a supervision consultant and he will use the contract also for his like contractual relationship with a contractor so employer to engineer they will have a contract employer to a contractor they will also have a contract now there is something called the form of contract and previously we discussed the type of contracts types of contracts the fixed rate contract and the cost reimbursable contract time and materials and all these these are types types of contract but here which form of contract he can use there are many uh like popular forms of contract but the most popular ones are the fedic forms of contract and a form of contract it's how the contract looks like and what are the clauses being agreed upon inside this contract so this is what we call a form of contract so the employer with the engineer can use the fidic white book and with the employer with contractor he can use fedex redbook so these two forms of contract will work here in this contractual relationship employer to engineer or employer 2 contractor now the contractor has a contract to do this project and as we said he needs suppliers and he needs subcontractors in order to be able to finish this project so in that case this contractor has a contract with the employer okay but he needs to have an agreement also with a subcontractor to either or supply and something in this project and this is where the subcontract will come into picture the contractor will have a subcontract agreement with this subcontractor for the installation or supply and installation of something and the form of agreement that can be used here actually it can be drafted or like some contract manager will draft this based on any other form of contract like he can take the form of contract of the fedex red book which is the agreement between contractor and employee and he can like simplify it because the contract here between employer and the contractor is with very big value of money so so many conditions and terms should be there and in the contract and that's why they go for fidec redbook but the contractual relationship between the contractor and the subcontractor in terms of amount is a bit smaller and it doesn't read it doesn't need that kind of complicated form of contract so they go for a like handmade contract we say which is a contract that can be drafted by the contract manager who works here in in the contracting company and it keeps developing over time like they the contractor will agree in this project with a subcontractor for a certain scope terms and the conditions and everything and something will happen in between some problem happened and that problem was not covered in the subcontract agreement that they had between each other so the contract manager who works here will learn from this and in the next project he will try to add this close to the contract to bind the subcontractor more so that's how the subcontract agreement will keep developing and improving every time the same scope is awarded again and actually this takes us to the experience of the contract engineer or the contract manager who works here that's why companies are always looking for experienced contracts manager to hire them why because they will have the experience like when whenever they are doing a subcontract agreement for let's say full ceiling or for the tile installation or block installation or mep supply and installation or aluminium and the glazing joinery all these things an experienced contract manager will know in each of these contracts what are the critical clauses that should be there and he will make sure that they are there to avoid any problems between the contractor and the subcontractor because in the end this will affect only the performance of the project so we use a subcontract agreement between a subcontractor and a contractor but now a contractor wants just to supply some materials he want to buy something so for buying something only supply only there is no any installation involved there is no need for a subcontract agreement for that a purchase order will be enough so the contractor will just issue to the supplier a purchase order and we will see what is a purchase order what is the definition but for the time being we need to know that employer to engineer is a contract employer to contractor is a contract contractor to a subcontractor is a subcontract contractor to a supplier is a purchase order and actually supplier to factory also purchase order like how this supplier is buying the materials from the factory via purchase order because it is only a purchase he is just buying it and the factory is also buying the raw materials with a purchase order because he there is no any installation part included so we use a subcontract whenever there is a main contract and we are outsourcing part of the works so we use a subcontract if we are just buying something purchasing something we will be using a purchase order so definition of a contract subcontract and purchase order a contract is a written agreement concerning employment sales or tenancy that is intended to be enforceable by law this is the definition of a contract it's a written agreement concerning employment sales or tenancy or as we said like the relationship between the employer and the consultant or the employer and the contractor so all these things will come under contract but the subcontract is a written agreement concerning employment of a firm or person outside one's company to do work as part of a larger project so because here the contractor has this full scope he needs someone to do part of this scope so he will go for a subcontract because this is a part of a larger project but the purchase order is just an official document that buyers send to sellers to document the sale of products and sell services to be delivered so here contractor to supplier he will just issue him a purchase order supplier to factory again purchase order because these are only purchases so that's all regarding contracts subcontracts and purchase order we now understand for which relationship which type of these agreements we will be using and i'll see you in the next lecture