Target cost contract meaning

In this issue: Standard form contracts Defects Consultants on construction projects Planning Procurement Construction industry news Daily and weekly news alerts New and updated content Construction trackers No Weekly Highlights on 24 April 2025 Standard form contracts JCT sets out intention to launch new Target Cost Contract at Parliamentary Reception JCT has set out plans to launch its new Target Cost Contract, part of the JCT 2024 Edition, at the annual Construction Industry Parliamentary Reception on 13 June 2025. The suite comprises a main contract, a sub-contract and guides, aimed at projects that adopt a target cost with arrangements to share any difference. Payment will be based on an 'allowable cost', a 'contract fee' and, where relevant, a 'difference share'. JCT is also producing online resources to help users with implementation. The Reception will recognise JCT’s achievements and provide an early glimpse of these resources. See: LNB News 16/04/2025 41...

In this issue: Building safety JCT contracts Litigation Building regulations Projects Daily and weekly news alerts New and updated content Construction trackers Building safety Building safety Damages under the Defective Premises Act 1972—what’s recoverable? (Wilson v HB (SWA)) In Wilson v HB (SWA) Ltd [2025] EWHC 1315 (TCC), the TCC removed multiple heads of claim pursued against a developer by former leaseholders of residential flats. The defects case relied on alleged breaches of duty under section 1 of the Defective Premises Act 1972 and breaches of leasehold covenants. The court concluded that several claimed losses were too remote, or simply hypothetical. See News Analysis: Damages under the Defective Premises Act 1972—what’s recoverable? (Wilson v HB(SWA)). The Building Safety Levy (Scotland) Bill—a quick guide The Scottish Government presented the Building Safety Levy (Scotland) Bill to the Scottish Parliament on 5 June 2025. The Bill proposes a new tax: the Scottish Building Safety Levy....

News Analysis: Construction law—key developments in 2024, and what to expect in 2025 In January 2025, we issued News Analysis: Construction law—key developments in 2024, and what to expect in 2025, reviewing the standout construction law shifts from late 2024 and setting out our expectations for 2025. Here, we reflect on the news, events and reforms from the first six months of 2025, and preview what we anticipate over the rest of the year. Momentum did not ease in early 2025. At the start of the year, both the Ministry of Housing, Communities and Local Government (MHCLG) and the Scottish Government issued responses to the Grenfell Tower Inquiry Phase 2 report. Staying with building safety, the Technology and Construction Court (TCC) offered helpful guidance on building liability orders and information orders under the BSA 2022 in BDW Trading v Ardmore Construction. In addition, the TCC’s decision in 381 Southwark Park v Click St Andrews was published, representing the first reported instance of the court making a building liability order...

Practice Note This Practice Note consolidates our content on the amendments as introduced in the 2024 editions of the Joint Contracts Tribunal (JCT) standard form construction contracts...

Construction contract pricing structures This Practice Note contrasts the pricing models most often used on construction projects, considering lump sum, remeasurement, prime cost and target cost contracts. Lump sum Also referred to as: Fixed price In brief: the contract sum is settled before any works begin. Features At the outset, employer and contractor agree the total amount payable for the project, prior to commencement. The price is not remeasured as the works proceed, so adequate tender information is essential for accurate pricing. Where the contractor is not responsible for design, pricing is typically based on drawings and: a bill of quantities prepared by a quantity surveyor in line with a published standard method of measurement, listing the work items, labour and materials needed to complete the works. During tendering, the contractor inserts rates against each item in the bills of quantities, and the product of the quantities...

The Infrastructure Conditions of Contract (ICC) for Civil Engineering Works began life in 1945 as the ICE Conditions of Contract. After a series of revisions, a substantial overhaul arrived in 2014 with the publication of a new ‘With Quantities Version’ (see Practice Note: ICC With Quantities Version 2014). In June 2018, two further ICC forms were issued—the Target Cost (TC) Version and the Design and Construct Version (see Practice Note: ICC Design and Construct Version 2018). This Practice Note offers guidance on the ICC TC Version 2018. Back in 2011, the Association for Consultancy and Engineering released the first TC Version, derived from the ICE Conditions of Contract 7th edition and tailored for target cost application. The 2018 TC Version is a full rewrite, aligning with the structure and drafting approach of the 2014 Without Quantities Version. Nonetheless, both the 2011 and 2018 TC editions preserve the same collaborative ethos, with the parties jointly managing risk. Scheme of Many clauses are unchanged between the 2014 With Quantities...

This Agreement is entered into on [ date ] Parties 1 [ insert name of supplier ] [ of OR a company incorporated in [ England and Wales ] under number [ insert registered number ] with its registered office at ] [ insert address ] ( Supplier ); and 2 [ insert name of customer ] [ of OR a company incorporated in [ England and Wales ] under number [ insert registered number ] with its registered office at ] [ insert address ] ( Customer ) (each of the Supplier and the Customer is a party, and together the Supplier and the Customer constitute the parties). Background (A) The Customer [ insert information about the business of the Customer ] seeks to [ insert objectives of the project ]. (B) The Supplier supplies [ insert business of the Supplier ] and holds experience in [ insert services being procured ]. (C) The parties have decided...