DOW 0.88% $5.76 downer edi limited

In my experience it depending on who carries risk as some...

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    In my experience it depending on who carries risk as some contracts are milestone based with associated payment schedules and these often have a deposit held in trust for the duration of the contract. Even better is some clients pay an up-front percentage of contract value with milestone payments and then a "completion of works" payment made some set period after contract ends. This approach depends on the accuracy of the contract and the degree of works volatility (ie. contract variations) because if the initial contract value is small then the early deposit may lose out to a percentage retained at the other end. Whereas a fix price contract may work the other way and then EV based pricing projects are good where there is a whole lot of "we don't know what we don't know yet" stuff in the future as you get paid for the proverbial "effort expended to dig a hole in the ground".

    Costs engineers are good as sussing out the project nuances and with a financial modeller they can put a "best value" approach to the legal and exec teams to negotiate with the client. I learnt along time ago never agree financials until the terms are finalised and the legal team are happy.

    Funding, arranging, negotiating and defining large or even mid-sized projects with the wrong project model, wrong type of agreements and wrong approach can make or break a company.

    Geeez this is more your space than mine. Ha!

    Cheers.
 
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