- Project plans
- Project activities
- Legislation and standards
- Industry context
- Specialist wikis
Last edited 15 Oct 2020
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 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 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.
 Related articles on Designing Buildings Wiki
Featured articles and news
BSRIA explores US share of 2020 VRF market.
New fire safety requirement comes into force.
Different types of bridges are meant to move.
A logical approach to handling the internal voice of self doubt.
First fashionable in the US, decorative metal has become globally desirable.
Helping communities preserve and enhance historic environments.
Creating comfortable climates despite extreme temperatures.
Study examines how adjustable arrangements can succeed.
Government announces plans to improve accessibility.
Resource addresses pandemic-related NEC4 contract issues.
Incorporating EDI into the provision of fair access.
Government announces global innovation strategy.