NEC ECC - How a Contractor gain profit under option A

NEC3 and NEC4 Contracts General
1

I have worked in different options in NEC but just had a question that how the contractor will get a profit if they have chosen Option A.
From my understanding and the terminology of the contract is 'Option A is a priced contract with an activity schedule where the risk of carrying out the work at the agreed prices is largely borne by the contractor.

So the contractor is well aware that he is taking a risk while choosing the contract but wondering how the contractor will make money in this type of contract. Please can you explain. Many thanks. Kishore

2

Firstly they will include risk and profit within their tendered lump sum fixed price, and if they manage the works well they will make money.

In terms of compensation events the Contractor will apply their fixed fee tendered in contract data part 2 to any elements of Defined Cost in building up their quotation.