A New Pricing Contract of EPC General Contract： The Application of Target Contract
WANG Yan shu and CHENG Hu
DOI:10.11835/j.issn.1674-4764.2008.05.015
Received ,Revised , Accepted , Available online July 01, 2015
Volume ,2008,Pages 73-76
- Abstract
Due to very large scale of general contract projects, the scope of projects is always uncertain when the contractor bids and the difference between the planned and actual volumes of projects is very large. If a lump sum contract is used to establish the price, contractors thus must take high risks. The contract price is always high, and both owners and contractors show unwillingness to optimize technology under lump sum contract conditions. Owners are inclined to extend the norm and scope of projects. Such situations may result in additional costs. As a new pricing contract, a target contract fits the situation when project scope is not fully defined or the forecasting risks are high. Such a contract can bring both sides enthusiasm for technology optimization and substantially reduces project cost. Therefore, a target contract is suitable for EPC general contract pricing.