How does the client calculate the percentages in the contract data? Does the following sound right ?: -97.5% = 0%, 97.5 - 102.5% = 50% 102.5% & above = 100%. This seems a lot of pain.
Dividing the Price for Work Done to Date (PWDD) by the total of the Prices, expressed as a percentage, once you get to 102.5% then the Contractor is responsible for the entire share amount past this point.
This does seem like ‘a lot of pain’, although there are no further details of the contract arrangements so this view is based entirely on the information provided.
Remember that the share amount is related to the share ranges so anything up to 97.5% is 100% the Client’s share and any amount calculated from 97.5% up to 102.5% is shared equally at 50%.
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Andrew is right. What’s more if the Contractor’s share is 0% for saving below 97.5% then that means there is very little upside for you, so heads you lose and tails the Client wins … so why bother with this contract?
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Thanks. That exactly what I was thinking.