Point of Lump Sum Item Cost plus Time Unit Pricing Percentage Labor Target Measurement

Contract rate contract and Contract rate contract cost contract

Differentiation contract Material contract Contract
Contract

Gains Draws up Materials Rewards for

more ’item-rate are any savings
Advantages Incentives profit Payment tender’ i.e. arranged between Can obtain
for early is very work based on
with respect between No risk Low risk bill of quality by the actual and
finish prompt approximate
to the actual and total owner. target cost
quantities and
contractor and amount
quoted drawings
item cost

Disadvantage No Payment No No provision No profit Actual contract

with respect High risk Rates
incentive is prompt, incentives to quote is paid on
Share risk
sum is
for early takes for early contractor’s cost of calculated on
to the may vary with the
finish supply finish own rate materials completion of
contractor later on, order at owner work
more less profit
paperwor
k
No risk Detailed Can start Client/owner Overall Total contract price
is based on the unit
Total cost is schedule project himself draws cost of rate of each item
Advantages defined at of items is without NO RISK Share risk up the constructi Target cost
of loss, with the is defined at
with respect early stages written finishing schedule of on is less Early start on site,
breakage contractor early stages before design is
to the owner along with designs
, transit
items
complete
rates
charges

Contractor Total cost High risk assigned Among must Risk for the
desire to is known Total cost Project contractors, 2 remain client as the
Disadvantage decrease after is duration Total cost is or more may vigilant Share risk cost of the
uncertain at with the
with respect costs may finish. uncertain may not quote the over the works is not
early stages contractor
to the owner be to May face at early be met same rate to materials known
detriment of financial stages get a part of
quality difficulty the work

Flexibility of Flexible- More Has

design Limited
drawings flexible to
Flexible –
flexibility to
Limited Limited Limited Flexible
can be design change
changing flexibility daily/ flexibility flexibility flexibility
submitted stages design
later. hourly
basis