Contract Administration and Practice Question 1: It is possible to have a target price contract under the main options in the NEC ECC, but target price contracts are not possible under the JCT SBC or the FIDIC Red Book contracts.
Critically evaluate why this is the case and discuss the main effects that a target price contract will have on the role of the parties and the contract administrator when compared with a contract based on a lump sum price or a bill of quantities. Answer 1: In writing your answer for this exercise, you might like to pose the following questions to yourself: • Is it the risk-sharing nature of target contracts that employers who use traditional forms of contract avoid? • JCT does have the provision for target contracting in its constructing excellence (CE) contract • Will target arrangements help the parties to work together more collaboratively? • True target contracting requires the contractor’s site accounts to be open for inspection • Can the use of a target contract allow for earlier contractor involvement in the project? • How do the share arrangements in the contract work and can different share arrangements promote different behaviors? Consider various sources in your answer.