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Nec3 (option c) target cost contracts If costs come in under the target, savings may be shared between the contractor and the client. What you need to know
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A presentation by claire king and rebecca ardagh 03 december 2020 A target cost contract sets an estimated target cost for the project, with incentives for the contractor to stay within this target On this hub you can find out more about the target cost contract, including
An introductory overview explaining how the jct target cost contract works and the key elements of the contract
Target cost contracts are different from traditional contracts primarily in pricing structure and risk allocation Traditional contracts typically involve fixed prices, with the risk loaded more onto contractors. The target cost contract is an innovative type of contract whereby the client and contractor commit to a target cost of a project prior to the commencement of its execution. Instead of a fixed contract sum, the contract operates on a target cost, which is agreed at the outset and detailed in the contract particulars
This target cost is substantiated by a target cost analysis, akin to the contract sum analysis in the jct design & build form. This process involves setting a cost threshold that reflects the project's scope, market conditions, and the contractor's capabilities.
