PROCUREMENT NEWS Finance Wales Fund and Construction Contracts

construction contracts

Earlier in 2017 an extra £30 million was made available to small and medium-sized construction companies.

The loan fund is run by Finance Wales and helps such companies to get projects started that they may traditionally have struggled to finance.

At the time the Cabinet Secretary for Communities and Children, Carl Sargeant, stated:

“We have a challenging target of delivering 20,000 affordable homes over this term of government. In working to meet our target, I want as many homes as possible to be delivered by SMEs, creating new capacity in this sector. I want to see people thinking innovatively about how we can do things differently to address the challenges we all face.”

Following this, we look at some of the different types of construction contracts available to organisations that are looking to make the most of this cash injection but might not be totally sure about the types of contracts available to them.

 

Lump Sum Construction Contracts

For this type of contract, it is agreed that contractors are to be paid a lump sum on completion of their work. This means that whatever the end cost of a project, the contractor will receive the same amount of money, meaning that it could work out very profitably. However, there is risk attached if the contractor goes over budget.

Lump Sum and Scheduled Construction Contracts

The difference between this and a Lump Sum Contract is that this type of contract requires a specific cost breakdown.

Cost Plus Contract

For this type of construction contract, the contractor is paid an amount over and above the documented cost of the work that is done, covering their overheads and making a profit in the process.

Cost plus Percentage of Cost Contract

This requires a detailed account of expenses as the contractor is paid the documented cost plus a percentage on top of that.

More about the fund can be read here

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Dec 27, 2017.