ABSTRACT
There are broadly three ways in which the contract price may be expressed or calculated: lump sum, schedule of rates or bill of approximate quantities and cost reimbursement. The New Engineering Contract has an option for a lump sum contract where there is a series of lump sums for each activity or group of activities identified in the activity schedule. For plant contracts the activity schedule could comprise acceptance of design, stages in shop assembly, delivery to site, completion of installation, and acceptance of tests on completion and so on. For civil engineering work therefore the method of pricing normally adopted is that of a bill of quantities and remeasurement. Various types of incentive, target cost or cooperative forms of contract have been devised, therefore, as a means of combining the flexibility and speed associated with cost reimbursement with a strong measure of cost discipline and an incentive to efficiency and economy.
