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In economics and business decision-making, a sunk cost (also known as retrospective cost) is a cost that has already been incurred and cannot be recovered. [ 1 ] [ 2 ] Sunk costs are contrasted with prospective costs , which are future costs that may be avoided if action is taken. [ 3 ]
According to the PMBOK (7th edition) by the Project Management Institute (PMI), Fixed Price Economic Price Adjustment Contract (FPEPA) is a "fixed-price contract, but with a special provision allowing for predefined final adjustments to the contract price due to changed conditions, such as inflation changes, or cost increases (or decrease) for special commodities".
A graphical representation of the conceptual differences between project delivery methods. There are two key variables which account for the bulk of the variation between delivery methods: The extent of the integration of the various service providers. The extent to which the owner is directly financing the project.
The EPC contractor coordinates all design, procurement and construction work and ensures that the whole project is completed as required and in time. They may or may not undertake actual site work. EPC companies are often used in large-scale projects, such as power plants, refineries, chemical processing facilities, infrastructure projects, and ...
A cost plus contract states that a client agrees to reimburse a construction company for building expenses such as labor, materials, and other costs, plus additional payment usually stated as a percentage of the contract's full price. This type of construction contract is an alternative to lump sum agreements.
One of the more troublesome examples of the distinction between extraordinary assumptions and hypothetical conditions regards the valuation of property with proposed improvements or proposed alterations. Such examples require the understanding of and inter-relation with prospective values, retrospective values, and contemporary values.
Image source: The Motley Fool. Kinder Morgan (NYSE: KMI) Q4 2024 Earnings Call Jan 22, 2025, 4:30 p.m. ET. Contents: Prepared Remarks. Questions and Answers. Call ...
Performance-based contracting (PBC) or results-based contracting, is a procurement strategy used to achieve measurable supplier performance. A PBC approach focuses on developing strategic performance metrics and directly relating contracting payment to performance against these metrics.