ABSTRACT
The nature of the contract between the purchaser and the contractor can take one of a variety of forms. This chapter considers the types of contract structures adopted, different pricing regimes and the terms of payments. The main ways in which the contract price may be expressed or calculated: lump sum, remeasurement, schedule of rates or bill of quantities and cost reimbursement. Terms of payment are a matter on which the commercial, technical and financial sides of the employer's business may find themselves pulling in different directions. The employer may attain the best commercial and technical result if they offer the tenderers terms of payment which while providing the employer with reasonable contractual safeguards impose the minimum strain on the contractor's financial resources. The employer minimizes the risk of being saddled with a contractor who has insufficient cash with which to carry out the contract and of having therefore to either support the contractor financially or terminate the contract.
