Price certainty in the construction industry
Price is the amount paid for acquiring a product or a service. It is not the same as cost, which is the amount incurred in making something or providing a service. Price is therefore understood from the buyer’s perspective while cost is understood from the producer/supplier's perspective.
Price certainty can describe a state of affairs whereby before a project or part of a project starts, a contractor is be able to buy materials and components at a fixed, pre-agreed price which is both competitive (possibly below the market average) and advantageous. Certainty is provided by the supplier that the goods will be supplied at the agreed price and at the right time, possibly over a regular period. The basis of price certainty is forward planning and pre-agreement.
For example, a contractor or subcontractor may be able to order a pre-agreed volume of fuel every month at a fixed price for a specified future period. This provides a greater assurance of supply and helps budgeting as it removes the uncertainty of fluctuating fuel costs.
On the supply side, price certainty may contribute to cost certainty in that as a result of the pre-agreement, the supplier receives a fair price for the product or service which covers their production and/or supply costs and leaves them with a profit.
In the absence of agreement, their may be uncertainty about price.
[edit] Related articles on Designing Buildings Wiki
- Budget.
- Capital costs.
- Construction costs.
- Construction price and cost indices.
- Cost control.
- Cost information.
- Cost of building.
- Cost overruns.
- Cost plans.
- Cost vs price.
- Front-loaded costs.
- Estimate.
- Hard costs v soft costs.
- Irrelevant cost.
- Operational costs.
- Other development/project costs.
- Relevant cost.
- Whole life cost.
Featured articles and news
Listed despite problems with its design.
Zen and the art of cycling exploration.
Design Council Homes Taskforce launched
To support government 1.5 million homes target within UK climate commitments.
The story of this knowledge quarter building.
In ecology, in hydrology, in biology and in architecture.
Creating environments that promote physical, mental, and social well-being.
UK cases of neutral current diversion
Research project looks for example contributions.
Overstocking and macro-economics cause a decline.
The 2024 update of the Common Assessment Standard
Demonstrating organisational capability’ to fulfil roles under the Building Safety Act.
56 recommendations for a better built environment
Published by the CIC ahead of the King’s Speech.
SkillELECTRIC Top 8 Competitors Named
in annual search for the UK’s best student electrician.
CIOB Diversity and Inclusion technical information sheet
Step-by-step guide on implementing D and I practices.
Conservation and the Indian City. Book review.
Reversibility in conservation ethics
Learning from painting conservation.
Where It's AT Podcast launched!
New CIAT Architectural Technology Podcast goes live.