Front-loaded costs - Revision history

Designing Buildings at 09:34, 15 October 2020

2020-10-15T09:34:14Z

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	* Sunk cost.		* Sunk cost.

−	[[Category:Appointments]] [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]]	+	[[Category:DCN_Definition]] [[Category:DCN_Guidance]] [[Category:Appointments]] [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]]

Editor at 18:19, 5 August 2019

2019-08-05T18:19:14Z

← Older revision		Revision as of 18:19, 5 August 2019
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	Front loading can be avoided by detailed cost planning and cash flow projection during the design development and tender stages of a project, giving the client a clear idea of how much they should be expected to pay at different stages. Tender assessment should then allow comparisons to be made between competing bids to determine whether individual tenderers have submitted excessive prices for certain aspects or stages of the works. During the construction phase, there should be careful assessment of applications for payment to ensure that the amounts paid do not exceed the value of the works completed.		Front loading can be avoided by detailed cost planning and cash flow projection during the design development and tender stages of a project, giving the client a clear idea of how much they should be expected to pay at different stages. Tender assessment should then allow comparisons to be made between competing bids to determine whether individual tenderers have submitted excessive prices for certain aspects or stages of the works. During the construction phase, there should be careful assessment of applications for payment to ensure that the amounts paid do not exceed the value of the works completed.

−	~~= Find out more =~~	+	= Related articles on Designing Buildings Wiki =
−		+
−	=== Related articles on Designing Buildings Wiki ===	+

	* Activity schedules.		* Activity schedules.
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	* Pre-tender estimate.		* Pre-tender estimate.
	* Preliminaries.		* Preliminaries.
		+	* Price certainty.
	* Relevant cost.		* Relevant cost.
	* Sunk cost.		* Sunk cost.

	[[Category:Appointments]] [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]]		[[Category:Appointments]] [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]]

Editor at 16:06, 6 August 2018

2018-08-06T16:06:16Z

← Older revision		Revision as of 16:06, 6 August 2018
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	* Pre-tender estimate.		* Pre-tender estimate.
	* Preliminaries.		* Preliminaries.
		+	* Relevant cost.
	* Sunk cost.		* Sunk cost.

	[[Category:Appointments]] [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]]		[[Category:Appointments]] [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]]

Designing Buildings at 10:57, 15 June 2018

2018-06-15T10:57:45Z

← Older revision		Revision as of 10:57, 15 June 2018
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	* Pre-tender estimate.		* Pre-tender estimate.
	* Preliminaries.		* Preliminaries.
		+	* Sunk cost.

	[[Category:Appointments]] [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]]		[[Category:Appointments]] [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]]

Designing Buildings at 07:58, 17 April 2018

2018-04-17T07:58:04Z

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	The term ‘front-loaded’ refers to costs that are applied disproportionately to elements of the work that take place early on during a project or part of a project.		The term ‘front-loaded’ refers to costs that are applied disproportionately to elements of the work that take place early on during a project or part of a project.

−	Suppliers may front-load costs (or bids) in order to maximise their revenue early in a project by assigning overstated values to the preliminary elements of the work. For example, a contractor might front-load costs for preliminary construction work such as services diversions, demolition, setting out, groundworks, piling, and so on.	+	Suppliers may front-load costs (or prices in bids) in order to maximise their revenue early in a project by assigning overstated values to the preliminary elements of the work. For example, a contractor might front-load costs for preliminary construction work such as services diversions, demolition, setting out, groundworks, piling, and so on.

−	Front-loading costs can help reduce a supplier's risk on a project, by improving their cash flow and ensuring that maximum payments are received on projects that might not proceed to completion. However, making payments in excess of the value of work completed puts the client under greater financial pressure early in the project and also at greater risk if the project does not proceed, or if a supplier has to be replaced. It can also act as a disincentive for suppliers to keep to ~~the~~ time schedules.	+	Front-loading costs can help reduce a supplier's risk on a project, by improving their cash flow and ensuring that maximum payments are received on projects that might not proceed to completion. However, making payments in excess of the value of work completed puts the client under greater financial pressure early in the project and also at greater risk if the project does not proceed, or if a supplier becomes insolvent or has to be replaced. It can also act as a disincentive for suppliers to keep to time schedules, as they may have already completed the most profitable parts of the works.

−	Front loading can be avoided by detailed cost planning and cash flow projection during the design development and tender stages of a project, giving the client a clear idea of how much they should be expected to pay at different stages. Tender assessment should then allow comparisons to be made between bids to determine whether individual tenderers have submitted excessive prices for certain aspects or stages of the works. During the construction phase, ~~their~~ should be careful assessment of applications for payment to ensure that the amounts paid do not exceed the value of the works completed.	+	Front loading can be avoided by detailed cost planning and cash flow projection during the design development and tender stages of a project, giving the client a clear idea of how much they should be expected to pay at different stages. Tender assessment should then allow comparisons to be made between competing bids to determine whether individual tenderers have submitted excessive prices for certain aspects or stages of the works. During the construction phase, there should be careful assessment of applications for payment to ensure that the amounts paid do not exceed the value of the works completed.

	= Find out more =		= Find out more =

Designing Buildings at 07:55, 17 April 2018

2018-04-17T07:55:05Z

← Older revision		Revision as of 07:55, 17 April 2018
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−	The term ‘front-loaded’ ~~can apply~~ to costs ~~where they~~ are applied disproportionately to elements of the work early in a project~~. A contractor~~ or ~~consultant may front-load costs in order to try and maximise revenue early in~~ a project ~~by assigning overstated values to the preliminary elements of the work~~.	+	The term ‘front-loaded’ refers to costs that are applied disproportionately to elements of the work that take place early on during a project or part of a project.

−	~~The~~ costs ~~can relate~~ to preliminary ~~construction~~ work ~~which is categorised as ‘front-end’~~, such as services diversions, demolition, setting out, groundworks, piling, and so on.	+	Suppliers may front-load costs (or bids) in order to maximise their revenue early in a project by assigning overstated values to the preliminary elements of the work. For example, a contractor might front-load costs for preliminary construction work such as services diversions, demolition, setting out, groundworks, piling, and so on.

−	Front-~~loaded contracts should generally be avoided by~~ project ~~owners~~ and ~~clients as they can pose financial risks due~~ to ~~providing payment~~ of ~~an amount that exceeds~~ the value of ~~the completed~~ work~~. At worst~~, it can act as a disincentive ~~on the part of the contractor~~ to keep to the time schedules ~~and complete on time, but it can also cause problems in the event of the appointment being terminated – the client will have no effective means of recouping the over-payment~~.	+	Front-loading costs can help reduce a supplier's risk on a project, by improving their cash flow and ensuring that maximum payments are received on projects that might not proceed to completion. However, making payments in excess of the value of work completed puts the client under greater financial pressure early in the project and also at greater risk if the project does not proceed, or if a supplier has to be replaced. It can also act as a disincentive for suppliers to keep to the time schedules.

−	Front~~-loaded costs may~~ be ~~unavoidable to a certain extent in~~ the ~~case of a construction manager or management contractor being appointed to better integrate~~ design and ~~construction~~, or the ~~early involvement~~ of ~~specialist contractors~~ or ~~suppliers~~. ~~However~~, ~~it can result in fewer problems as~~ the ~~project progresses~~.	+	Front loading can be avoided by detailed cost planning and cash flow projection during the design development and tender stages of a project, giving the client a clear idea of how much they should be expected to pay at different stages. Tender assessment should then allow comparisons to be made between bids to determine whether individual tenderers have submitted excessive prices for certain aspects or stages of the works. During the construction phase, their should be careful assessment of applications for payment to ensure that the amounts paid do not exceed the value of the works completed.

	= Find out more =		= Find out more =

Editor: Created page with "The term ‘front-loaded’ can apply to costs where they are applied disproportionately to elements of the work early in a project. A contractor or consultant may front-load cos..."

2018-02-28T13:34:23Z

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The term ‘front-loaded’ can apply to costs where they are applied disproportionately to elements of the work early in a project. A contractor or consultant may front-load costs in order to try and maximise revenue early in a project by assigning overstated values to the preliminary elements of the work.

The costs can relate to preliminary construction work which is categorised as ‘front-end’, such as services diversions, demolition, setting out, groundworks, piling, and so on.

Front-loaded contracts should generally be avoided by project owners and clients as they can pose financial risks due to providing payment of an amount that exceeds the value of the completed work. At worst, it can act as a disincentive on the part of the contractor to keep to the time schedules and complete on time, but it can also cause problems in the event of the appointment being terminated – the client will have no effective means of recouping the over-payment.

Front-loaded costs may be unavoidable to a certain extent in the case of a construction manager or management contractor being appointed to better integrate design and construction, or the early involvement of specialist contractors or suppliers. However, it can result in fewer problems as the project progresses.

= Find out more =

=== Related articles on Designing Buildings Wiki ===

* Activity schedules.
* Appointing consultants.
* Collaborative practices.
* Construction costs.
* Cost consultant.
* Cost plans.
* Estimating.
* Hard costs v soft costs.
* Initial cost appraisals.
* Pre-tender estimate.
* Preliminaries.

[[Category:Appointments]] [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]]