Architecture / June 7, 2018 /
The payment arrangements adopted on a contract directly affects the level of risk borne by the contractor. Where the contract is let on the basis of a drawings and specification lump sum the contractor assumes the risk for both the quantity and pricing. In lump sum contacts based on bills of quantities and remeasurement contracts the contractor assumes the risk for the pricing only. With reimbursement contracts the client assumes the risk for the quantity and pricing. The payment arrangement, therefore, directly motivates the contractors efforts to carry out the work in an efficient and economic manner. This in turn has a major impact on the final price paid by the client.
This is where the contractor provides the design and construction under one contract. Turnkey projects and many public private partnership developments are examples of this approach. Design and build offers the client competitively priced projects completed within rapid time frames by enabling the contractor to value manage the employers requirements and overlap design and construction operations. It is not successful where the employers requirements are poorly defined and the approach tends to produce functional architecture in terms of appearance.