Frequently Asked Questions
With regards to payments made to the subcontractor, the contractor only gets paid what it actually pays the subcontractor, see the first bullet point of clause 11.2(23). Therefore, if the contractor deducts the higher figure, that will reduce the amount the contractor pays the subcontractor and that reduction is included in the price for work done to date that the contractor is paid with regards to subcontractor.
Therefore, effectively any additional ‘profit’ for buying these materials at a lower cost forms part of the share calculation in the share mechanism in clause 53. Option C is a risk and reward sharing contract. The main risk or reward that is shared is that costs incurred are higher or lower than originally allowed for. That is what the calculation of the share in clause 53 does.