A Joint Division of the Institution of Civil Engineers and
the South African Institution of Civil Engineering

JCD Lecture series - Durban : Target contracts: the contracts of the future

Wed, 2008-12-03 00:00 -- superadmin




The Joint Civils Division of SAICE and ICE hosted its last event of the 2008 Lecture Series in DURBAN at the Paradise Valley Nature Reserve, 10 Oxford Road, Pinetown . 

Target contracts: the contracts of the future  

The lecture was presented by Ron Watermeyer.  The lecture addressed the following pertinent procurement issues:

In a target cost contract, the contractor is paid his costs as defined in the contract and receives his share of the gain or pays his share of the pain depending on whether or not such costs are less than or exceed the agreed target cost.
Target cost contracts are used on most large civil engineering works in the UK and are increasingly being used in building contracts. A few South African public and private sector clients have started to use target cost contracts. eThekwini Water and Sanitation have used such contracts to spend some 400 million Rand on the replacement of Durban’s asbestos cement water mains in a 17 months period from the time that the design consultant was appointed. Contractors are currently replacing pipelines at a rate of 80 km per month!
Ron Watermeyer will:

outline the NEC3 ECC philosophy and approach to target contracts;


  • explain how contractors can be selected on a competitive basis in target cost contracts within the current public procurement rules;

  • explain how target contracts can be used to get early contractor involvement in projects, particularly  in design and construct contracts;

  • indicate how target cost contracts can be linked to framework agreements to deliver buildings and infrastructure over a 3 to 5 year period; and

  • touch upon the auditing of costs.

We offer CPD points on qualifying lectures to those people who have e-mail addresses.
The Presentation can be downloaded from here in PDF Format. (229  kB)