However, it is much less likely that an employer will make the most of a contractor requiring a large project if it does not give the contractor the opportunity to enter the project. Under the right circumstances, a PCSA can bring focus, new ideas, design improvements and cost savings and can be the beginning of a strong working relationship. A declaration of intent alone is not so likely to achieve this. In a two-stage tender, the first phase is for the employer to select a preferred contractor by tender at an early stage of design development. Bidders submit a lump sum proposal for preliminary work, a program and method statement, but instead of being a flat price for the construction phase, this is an offer only for overhead, profits and preliminary work. After the selection, preferred employers and contractors work together, as it provides factory packages for fixed-price packages. If most parcels are validated, the contractor will submit its offer in the second phase and the employer will decide whether to accept it and enter into a lump sum contract for the entire plant. While a Memorandum of Understanding may be most used when the parties know what needs to be built, it can be used in other situations. For example, to demolish an existing building while the contractor completes his project for the proposed new project. Whether a developer uses a custom form of PCSA or a JCT form, in both cases, he must stick carefully to its use and suitability, including the above points. The use of a standard document document often provides a useful framework for a contractual relationship, but the PCSA JCT must take into account the various issues it does not address in that agreement and limited changes, to a large extent additions to JCT documents, may be desirable, including a careful review of the services to be provided, which are fundamental to agreements and success.
There are some important practical similarities for an employer using a letter of intent or a PCSA. Thus, in both cases, the employer develops a certain dynamic within the contractor. If it becomes difficult to agree on the final terms of the construction contract or if the contractor`s vision of a project under a PCSA does not appear to be part of the employer`s vision, there will already be a lot of water under the bridge. In these circumstances, it is difficult in practice for the employer to proceed with the project without the historical contractor. One of the concerns of employers in the pre-construction period is the potential leverage of the preferred contractor to increase the amount of the contract or renegotiate the conditions of execution of the work. To deal with this problem, the parties agree, in the details of the PCSA, to the criteria on which the contractor must submit its second tender offer, including the form of the work contract (including possible modifications) that must be concluded. PCSas are often used in design and construction projects to obtain early bids from the contractor. They can also be used to obtain pre-construction services from specialists ordered either by the contractor or by the client (for example. B in the case of a construction management contract), or through private financing initiative (PFI) projects or by the Public Private Partnership (PPP), in order to obtain contributions to the contractor for a consortium offering a project.
A PCSA is an interim contract that fills the legal void until a construction contract can be concluded. With the increasing application of two-tier tenders, the use of PCSAs, which have evolved in their scope and complexity, has also increased. The PCSA should protect the interests of both parties by specifying the respective obligations and rights. PCSas can vary in complexity and simpler versions A well-written letter of intent gives the employer and the contractor a legal framework in which the contractor can start (and be paid) with the work.