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.
The location of the project will influence its cost. High value sites attract high value developments and it is inappropriate to locate low value projects on valuable sites. Local development plans will constrain what can be built on such sites in any case. In general, urban locations are more expensive than their rural equivalents due to higher local wages, costs associated with access constraints, limited space for staff accommodation facilities and material storage, and the additional security measures required.