Payment systems and contract administration
Payment systems can be classified in a variety of ways and any classification is unlikely to be exhaustive. Contract strategies can be broadly categorized as either price-based or cost-based.
1. Price-based – lump-sum or re-measurement with prices being submitted by the contractor in their bid, or
2. Cost-based – cost-reimbursable or target-cost, the actual costs incurred by the contractor are reimbursed together with a fee to cover overheads and profit.