(Solution) CIPS PDC Royal Commission for Alula Managing Risk of Increased Costs

Solution

2.3 Risk of Increased Costs

As evidenced in Heravi and Mohammadian (2021) the cost overruns risk is as a consequence of prevalent of badly written conditions of contracts. Nevertheless, there are broadly prevalent circumstances which are integrated for prioritising on aspects which impact or potentially impacting a specific contract. In terms of costs, RCU terms and conditions note that;

Further, for RCU, they integrate Key Performance Indicators (KPIs) which are meant for ensuring that a clearly agreed pricing is used for the contracts. Often, this has contributed to challenges with the PS&M since they have remained hellbent on when these contracts could be altered. This inform the need for harnessing the awareness level of the contracts and how different occurrences could inform on the contract changes on costs. As evidence in Alebrahim vs BM Design London Ltd [2020] EWHC 3393 (TCC) case which involved a contract for refurbishment of a residential property, the contractor had increased the estimated costs initially (Creedy et al., 2010). The court of law noted that the employer can only pay for the trade price items and not any price which is not agreed upon. Further, in this case, the RCU terms and conditions note that,

Hence, there is no instances where the buyer/RCU can incur any further costs which were not initially stipulated in their contract….

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