chapter  12
17 Pages

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.