Contract Types for Railway Department Construction Purposes

The Railway Department usually follows the Item Rate contract type for construction purposes. This contract type is also known as the Schedule of Rates contract. Here are the reasons why:

Definition of Item Rate Contract

An item rate contract is a type of contract where the contractor agrees to execute the work as per the items and rates specified in the schedule of rates attached to the contract.

Advantages of Item Rate Contract

The advantages of item rate contract are:

- It provides a clear understanding of the scope of work to be executed.
- The rates for each item are predetermined, which eliminates the possibility of disputes.
- The contractor has to execute the work as per the specifications and designs provided by the Railway Department.
- The Railway Department can monitor the progress of work and the quality of the work executed.

Disadvantages of Item Rate Contract

The disadvantages of item rate contract are:

- The rates specified in the schedule of rates may not be realistic or may not reflect the actual cost of executing the work.
- The contractor may try to increase the quantity of work executed to earn more profit.
- The contractor may use inferior quality materials to reduce the cost of execution.

Conclusion

In conclusion, the Railway Department usually follows the Item Rate contract type for construction purposes as it provides a clear understanding of the scope of work to be executed, eliminates the possibility of disputes, and allows the department to monitor the progress and quality of work executed.