Ensuring ease of project execution

Collaboration basis

Understanding that all projects are characterized by a unique set of requirements, we emphasize our ability to offer various types of engineering contracts depending on the type of work and its conditions.


Types of engineering contracts available at FormaPharm Engineering Group:

1. Item Rate Contract:

This contract is also known as a unit price contract. Quotes are rated per unit of each item to be delivered. The quantities of each item of work to be executed enter the unit rate against each item of work, where the basis of the agreement is thus the unit rate of each item.


In this case, the rate of the Contractor for a unit of an item includes materials and labor, overhead cost and profit. This type of contract has its advantage when the quality of work is known, but not the exact quantities of the items to be delivered.

2. Percentage Rate Contract:

In this form of contract contractual parties draw up a schedule of items to be delivered according to the description of items in the estimate with the quantities, units, rates, and amounts outlined therein. When parties fix the rate of an item it is outlined as an “Item Rate Contract”.


In these types of contracts, the Contractors are required to offer to carry out the work at par with the rates shown in the bill of quantities or percentage above or below the rates indicated in the agreed bill of quantities.

3. Lump-sum Contract:

A lump-sum contract is the most traditional form of contract which is still in use today.


In this form of contract, the contractual parties are required to quote a fixed sum for the total execution of work. The quotation must be as per drawing, design, and specifications supplied.

4. Turn-key Contract / All-in Contract:

Such contracts are utilized for large scale projects in which a Contractor takes responsibility for all aspects of design and construction.

5. Labor Contract:

In some cases, the Investor purchases the required materials and invites Contractors to solely conduct labor work. In these types of contracts, the Contractors set their rates for the labor per unit execution of each item.

6. Materials Supply Contract:

In a Material supply contract, the rate of supply is set for the required quantity of materials, inclusive of all taxes and logistics charges, in accordance with delivery terms, within the agreed deadlines.

7. Piece Work Contract:

In such a Contract, rate is agreed upon without reference to the total quantity of work to be executed or the quantity of work to be executed within a given period.

8. Target cost Contract:

Target cost contracts base their pricing on a figure which is aptly known as the target cost. This number is scoped by both parties before reaching an agreement and represents the expected cost.


If the final cost of the project is below the target cost, both the Contractor and the Investor split the savings (“gainshare”). Equally if the final cost exceeds the target cost, both parties are responsible for paying this additional cost (“painshare”).

A proper collaboration strategy unravels the potential, knowledge and capacity of every employee, thus generating innovation, value and improving productivity.