Study To The Management Of Contract Cost Alteration For Project Constuction

During a project construction, once the contract is awarded, the contract price then has become the reflection of the trading price of the project to be constructed under the contract conditions. The contract cost alteration has to do with the economic benefit of both the employer and the contractor (the following refer as "the both parties"), so its management with scientific method shall be of great importance. This paper has put forward the theory and method to the management of contract cost alteration according to the author's project management experience in many years, which can give reference to those who want to be in line with the international practice on this regard.Based on the FIDIC contract conditions which is recommended by the World Bank on its financed projects and other contract conditions widely adopted, this paper discusses and analyzes the contract authorization to the Engineer, the basis and alteration risks of contract cost during construction. A so-called "but-for" cost analysis technology is put forward and proof is given to this technology.During project construction, contract cost alteration is mainly from various change of work and schedule and some non-engineering reasons like new version of law enforcement and change of condition furnished by the employer, etc. Disputes will appear due to these changes can not be dealt with timely, then the benefit expectation of the both parties becomes uncertainty and the contract cost will alter finally. This paper gives detailed proof and analysis to the cost alteration due to change of work and schedule and so on. Specific methods and real examples are given to the management of cost alteration from the viewpoint of the Engineer.