ABSTRACT
Before formally commencing with supply it is useful to distinguish between cost and price. The basic difference arises from the perspective you are considering. For example, from a supplier’s point of view, when a producer sells a good to a consumer the cost and price should not be the same. Normally, the producer seeks to make a profit – it is important, therefore, that the cost of the good is less than the selling price. Consequently, it is quite usual in construction for the cost of a project to be estimated and a mark-up for profits (risks) and overheads added before arriving at a price for the job. The contractor’s mark-up is the difference between price and cost. In the present environment in the UK, however, many clients have become more knowledgeable and powerful; the client (or consultants acting on behalf of the client) predetermines an acceptable price and the contractor has to try to meet this figure.
