25/3334–6FE Reference Handbook 10.4 · Ethics · Contracts

Handbook formula

Contracts & Conflicts of Interest

A valid contract needs offer, acceptance, and consideration. Engineers must disclose conflicts of interest and avoid competing against a client with information gained in confidence. Typical civil contracts: lump sum, unit price, cost-plus.

Lump sum — risk on contractor
Unit price — quantity risk shared

Step-by-step solved example

A PE designs a site for Client A, then is asked by Client B to design a competing development next door using A's unreleased geotech data. Allowed?

  1. 1. Confidentiality

    Geotech data belongs to Client A until released.

  2. 2. Conflict

    Cannot use A's data for B. Decline, or proceed only with A's written consent and full disclosure.

Answer: No, unless A consents in writing after full disclosure.

10 practice questions

0/10 correct

1.Three elements of a contract are

2.In a lump-sum contract, quantity overruns are typically paid by

3.A unit-price contract is most appropriate when

4.Cost-plus contracts shift most cost risk to

5.A conflict of interest must be

6.Liquidated damages in a construction contract are

7.Retainage is typically

8.A bid bond protects the owner if the bidder

9.An engineer serving as both designer and construction inspector should

10.A limitation-of-liability clause typically