ABSTRACT
Proper communication between employer and contractor is one of the essential factors in successful contracting. No contractor can afford to be liable for a risk against which it is difficult to insure and which is out of all proportion to the value of the contract and to his anticipated profit. The contract may provide an incentive to a supplier/contractor to achieve completion either on or in advance of time in broadly several ways. Particular care has to be taken when negotiating a bonus and penalty clause on a cost-reimbursement type of contract. The time for completion under the contract and therefore the point at which any liquidated damages for delay are to be assessed is when the works have passed the tests on completion. There are several ways in which the method or terms of payment can give the contractor an incentive to early completion.
