- Project plans
- Project activities
- Legislation and standards
- Industry context
Last edited 24 Jan 2020
Price certainty in the construction industry
Price is the amount paid for acquiring a product or a service. It is not the same as cost, which is the amount incurred in making something or providing a service. Price is therefore understood from the buyer’s perspective while cost is understood from the producer/supplier's perspective.
Price certainty can describe a state of affairs whereby before a project or part of a project starts, a contractor is be able to buy materials and components at a fixed, pre-agreed price which is both competitive (possibly below the market average) and advantageous. Certainty is provided by the supplier that the goods will be supplied at the agreed price and at the right time, possibly over a regular period. The basis of price certainty is forward planning and pre-agreement.
For example, a contractor or subcontractor may be able to order a pre-agreed volume of fuel every month at a fixed price for a specified future period. This provides a greater assurance of supply and helps budgeting as it removes the uncertainty of fluctuating fuel costs.
On the supply side, price certainty may contribute to cost certainty in that as a result of the pre-agreement, the supplier receives a fair price for the product or service which covers their production and/or supply costs and leaves them with a profit.
 Related articles on Designing Buildings Wiki
- Capital costs.
- Construction costs.
- Construction price and cost indices.
- Cost control.
- Cost information.
- Cost of building.
- Cost overruns.
- Cost plans.
- Cost vs price.
- Front-loaded costs.
- Hard costs v soft costs.
- Irrelevant cost.
- Operational costs.
- Other development/project costs.
- Relevant cost.
- Whole life cost.
Featured articles and news
The government moves to halt the rise of gender neutral facilities.
The role of HVAC systems in the safe return to work.
CLC provides guidance related to product marks, post-Brexit.
Net zero goals incorporated into plans for a new European Bauhaus.
BREEAM offers its resilient approach to Building Back Better.
Country moves one step closer to creating independent body.
BSRIA examines factors driving the industry.
Ensuring designs are developed, validated and can be effectively implemented.
The Homebuyer Survey most suitable for newer homes or simple properties.
Health and safety practices for body and mind.
28 leading bodies set out their vision for the future.
Chancellor announces latest Winter Support packages.
Tapping technology to boost infrastructure and create jobs.
4 ways to ensure certificates are valid.