Emerging cost contract
Emerging cost (Time and Materials (T&M)) contracts are most commonly used for rail infrastructure projects.
They are essentially cost reimbursable management contracts for a programme of works and services where the management contractor is paid direct costs identified in an 'estimate of project costs'. They provide for sophisticated management services along with sub-contracting the construction of the works.
However, while there may be target costs and schedules of rates for individual items of the programme of works, with associated incentives and penalties, there is no overall target cost. This means that the final value of the contract may not be known until the contract is complete. This can be useful where setting an overall target cost would restrict the client’s ability to vary the scope of works.
This means the client is accepting many of the financial risks of the project, and must have the expertise and appropriate controls to manage those risks.
Emerging cost contracts provide for value engineering and for the right to terminate if the cost estimate reaches an agreed percentage above the original estimate.
Emerging cost contracts are often applied over a defined period of time. The longer this period of time, the more consideration the contractor is likely to give to long-term performance issues in design and workmanship.
[edit] Related articles on Designing Buildings Wiki
Featured articles and news
Top 50 firms awarded 52bn of projects in the last year
New engineering data shows.
Enhancing construction site reporting efficiency
Through digitisation and the digital revolution.
Noise in the built environment
BSRIA guide TG 20/2021.
17,000 people suffer conditions as a result of exposure to excessive noise at work.
Turning down the noise: Auditory health
A pervasive risk with far-reaching consequences.
UK Construction Week, London is here !
Debuting major international pavilions and much more.
Getting the most out of heat pumps and heating
How heat pumps work and how they work best.
Plumbing and heating for successful retrofit and renovation
Low temperature underfloor systems and heat pumps.
Cost-of-living crisis and home improvement plans
Starting on the right footing and top tips for projects.
Delays on construction projects
Types, mitigation and the acceleration of works.
From Chaucer to Fawlty Towers.
Electrotechnical excellence, now open for entries.
Net zero electricity grids BSRIA guide NZG 5/2024
Outlining the changes needed to transition to net zero.
CIOB Global Student Challenge 2024
Universitas Indonesia wins for second year running.
ECA 2024 Apprentice of the Year Award
Entries open for submission until May 31.