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In Schedule Contract the Payment Is Made on the Basis of

In Schedule Contract, the Payment is Made on the Basis of…

Schedule contracts are a common method for procuring goods and services by the government and commercial entities. These contracts allow for flexibility and ease of ordering, as they establish pre-negotiated terms and conditions for a set period. One important aspect of schedule contracts is the payment structure, which is typically based on either a fixed price or an hourly rate.

In a fixed-price schedule contract, the payment is predetermined and will not change regardless of how much work is completed. This type of payment structure is common for projects with clear deliverables, such as software development or construction. The contractor and the buyer will agree on a set price for the work to be completed and the payment will be made upon completion of the work.

On the other hand, hourly rate contracts are more fluid in nature. The payment is calculated based on the number of hours of work completed by the contractor. This type of contract is suitable for jobs where the scope of work is not clearly defined at the outset and requires ongoing changes and modifications. Hourly rate contracts allow for more flexibility in the payment structure as it can adapt to any changes in the project scope.

In both types of schedule contracts, the payment structure can be further broken down into payment milestones. Payment milestones are events or markers in the project where a certain percentage of the payment is due. For example, if a construction project is divided into three phases, the payment may be divided into three equal parts, with each part due upon completion of each phase.

In summary, schedule contracts provide a flexible and efficient way to procure goods and services. The payment structure within a schedule contract can vary based on the nature of the project and the level of detail in the project scope. Both fixed-price and hourly rate contracts offer unique advantages that can benefit both the contractor and the buyer. Payment milestones offer a structured way to make payments throughout the project and ensure that payments are made efficiently.

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