Parties agree to a fixed price for the entirety of the works, usually best for projects with a well defined scope of work.
If a project has an uncertain number of repeatable elements, it can be beneficial to dived certain work packages into fixed cost units and bill as required for completion.
When confronted with enough uncertainty to merit a flexible model but not complex enough to warrant full scale administration, it can make sense to fix contracts on fixed rates plus margin.
A popular model for contracting and controlling large projects with well known scope.
When projects are too uncertain but necessary, sometimes the drudgery of invoices, bills of material and timesheets becomes a profitable endeavor.
Subject to the demands of the project and relationship with the vendors, it could be beneficial to both parties to set deliberate and well defined contract incentives.
Likewise subject to the demands of the project and relationship with the vendors, it could be beneficial to both parties to set shared contract incentives with certain vendor groups.
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