Pricing options of developing contract

Subject: Sales and Distribution Management

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Paper Type: Assignment

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Subject: Consideration of pricing options of developing contract

There are various pricing options are considered for the construction of library. The pricing options for the contract is based on unit price contract, cost plus contract, lump sum contract, percentage of construction contracts and incentive contracts. The percentage of construction contracts is based on the compensation towards the cost of construction and commonly used in the engineering contracts. Incentive contracts are also called engineering performance towards compensation based. This performance is determined under target schedules, budgeting and quality. Incentive contracts fail in two categories cost reimbursement incentive contracts and fixed price incentive contracts.  The cost plus contract is an agreement that involves consent of buyers to pay complete cost of labor or material to amount of overhead and profit. The unit price contract is considered when for the anticipation of quantities that are used in the project to their unit prices.   The requirement of quantity is carried in the final price. (Fisherstark.com, 2015)

Lump sum contract is best options for the construction of library. The described project and specific performance is agreed by contractor or engineer for a set price. Lump sum contract pricing is also known as fixed price contract. Fixed price contract is mostly used in engineering contracts. The schedule and scope of project is definite   that allows contractors or engineers to build estimation of cost of the project. One of the potential benefits is recognized from fixed price contract is the development of schedule management plan according to the appropriate budgeting. The predictability of the project cost is determined under fixed cost pricing. The disadvantage of fixed price contract is volatility in prices of material cannot affect positive impact on the project pricing. When market forces change the value of supplies and material that is necessary for the production of goods and services is harmful for the engineer in fixed price contract.

Design-Bid-Build type of project is associated foe delivery of project. However, certain general conditions of contract are required to manage contract.  Consultation with contract or engineer continues engage with employees, proper documentation, effective consideration of pricing options, aware of all stage of construction process, confronting challenges and Commencement of the work. Typical general conditions include proper documentation of material requirements as well as resource allocation, avoidance of interferences, development of progressive reports, sufficiency of accepted contract amount and financial arrangements are the most important general conditions are required for maintaining the project requirements in effective manner. A competitive bidding is most appropriate techniques that build contractors for effective cost advantage. (Cidb.org, 2008)

Competitive bidding provides transparency to mitigate risk factors, promotes competition between contractors and open tendering ensures win situation for the library construction.  The phases of contract are very critical to execute the construction of library. Thus, important consideration regarding general conditions must be focused to carry on project delivery and well building of library construction. 

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