4 Type Of Procurement

Question 0

Guaranteed Maximum Price

Answer 0

Contractor is paid for actual cost of works plus overhead, up to a ceiling price (unless client variation).
Any cost savings are returned to the owner, any overruns are absorbed by the contractor.
Obviously this places a premium on the overheads/price of contract.

Question 1

Lump Sum Contract

Answer 1

ABIC, AS2124, AS4000
Traditional procurement with architect as superintendent
Contractor provides fixed price but can claim for variations due to latent conditions or client decisions.

Question 2

Cost Plus Contract

Answer 2

Contractor is paid for cost of works plus margin - without ceiling price.
Client bears all risk - no incentive to complete on time/budget, no retention sum
Total costs not known until the end

Question 3

Design and Construct/Novated

Answer 3

Consultant team novated to builder after tender

Contractor bears risk of errors/omissions/latent conditions

Question 4

Managed Contract

Answer 4

Project Manager - acts as clients representative, coordinates and directs consultant team.
Construction manager - owner engages sub-consultants directly, coordinated by construction manager.