The JCT Target Cost Contract is designed for construction projects where the Employer wishes to incentivise the Contractor, and which is achieved through the setting of a Target Cost and the provision of sharing arrangements (a pain and gain mechanism) in relation to actual allowable costs incurred. Under the Target Cost Contract the contractor carries out both the design and the construction work. Design and build projects can vary in scale, but the Target Cost Contract is generally suitable where detailed provisions are needed.
Features of projects using the Target Cost Contract:
- The Employer must set out its requirements for the design and construction of the works (the Employer’s Requirements). These together with the Contractor’s Proposals and Target Cost Analysis provide the basis for the agreed Target Cost.
- The Employer’s Requirements should set out in detail the parameters within which the Contractor should base its proposals, including the format and level of detail required for the Target Cost Analysis.
- The contract provides for ‘pain and gain’ (Difference Share) and the value of work for the purposes of adjusting the Target Cost is determined by reference to the rates and prices in the Target Cost Analysis.
- The Employer normally uses an agent (either external consultant or employee) to administer the contract.
- Works can be carried out in sections.
Important note for contract users in Scotland and Northern Ireland
Users in Scotland should refer to www.sbcconline.com regarding the SBCC suite.
Users in Northern Ireland should contact The Royal Society of Ulster Architects at www.rsua.org.uk or call 028 9032 3760 for copies of the Northern Ireland Adaptation Schedules to JCT suite, or any related queries.