The difference between admeasurement and emerging costs contracts

Admeasurement contracts, are commonly used on civil engineering projects, whilst with some similarly, emerging costs contracts are often reserved for rail infrastructure projects. In both cases it may be that there is no overall target cost or it is accepted as an estimate that may change. As a result both approaches may rely more heavily on schedules of rates, target or estimated costs and in turn a client could be more accepting of the financial risks associated with the project.

Admeasurement is common in situations where the type of works required can be described in reasonable detail, but the amounts cannot, such as excavation works where the quantity of excavation required is difficult to assess until after the works have started. Emerging cost contracts are often applied over a defined period of time, so that the longer the period of time, the more consideration the contractor is likely to give to long-term performance issues in design and workmanship. These contracts therefore in effect provide sophisticated management services along with sub-contracting the construction of the works.

Emerging cost contracts are essentially cost reimbursable management contracts for a programme of works and services, where the management contractor is paid direct costs identified in an 'estimate of project costs'. Whilst there may be target costs and schedules of rates for individual items of the programme of works, with associated incentives and penalties, there is no overall target cost. This means that the final value of the contract may not be known until the contract is complete, but setting an overall target cost may be useful as it would restrict the client’s ability to vary the scope of works. Theses contracts provide for value engineering and for the right to terminate if the cost estimate reaches an agreed percentage above the original estimate.

Rates are provided in Admeasurement contracts in the contractor’s tender, either as part of the priced bill of quantities, or within a schedule of rates. Then the actual quantities of work carried out are measured and the rates applied to those quantities. The contractor is paid for the actual work they have done, so quantities paid for may vary from the original estimates. Whilst there maybe just a schedule of rates, rather than a bill of quantities, so approximate quantities may be provided to allow the contractor to estimate the amount of work required, but there is no guarantee that that quantity will be required, and so appropriate rates are sometimes difficult to determine.

[edit] Related articles on Designing Buildings

• Admeasurement.
• Bills of quantities.
• Construction contract.
• Contract sum.
• Cost reimbursable contract.
• Emerging cost contract.
• Force account work.
• Measured term contract.
• Management contract.
• Procurement route.
• Remeasurement.
• Sub-contractors.
• Schedule of rates
• Schedule of rates term contract.
• Target cost contract.
• Tender.
• Unit rates basis of payment.

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