1. Contrats à prix forfaitaire

Definition

Contract in which the contractor undertakes to carry out the entire project for a Fixed global price in advance. Payments are generally linked to milestones.

Advantages

• Predictable costs for the client
• Simplification of contract and budget management
• Transfer of financial risk to the entrepreneur

Disadvantages:

• High risk for the entrepreneur in case of exceeding
• Low flexibility in case of scope changes

Recommended use:

Small to medium-sized projects with a well-defined scope (housing, offices, public projects)

2. Unit Price Contracts (Measure & Pay)

Definition

The project is broken down into work units, each with a unit price (€/m², €/tonne, €/m³...).

Advantages

• Flexibility on quantities
• Suitable for partially defined perimeters
• Payment based on work actually performed

Disadvantages:

• Risk of budget overrun if quantities exceed estimates
• Requires precise measurement tracking

Recommended use:

Infrastructure projects (roads, pipelines, earthworks)

3. Cost-Plus / Reimbursable Contracts

Definition

The client is repaying the actual costs and one remuneration for the entrepreneur.

Main variants:

• CPFF (Cost-Plus-Fixed-Fee) fixed fees
• CPIF (Cost-Plus-Incentive-Fee) performance-based bonus
• CPAF (Cost-Plus-Award-Fee) Remuneration based on customer evaluation

Advantages

• Suitable for complex and uncertain projects
• Promotes quality
• Allow a quick start

Disadvantages:

• High financial risk for the client
• Risk of cost overrun

Recommended use:

Complex projects (defence, R&D, emergency reconstruction)

4. Guaranteed Maximum Price (GMP) Contracts

Definition

Cost-plus contract with a price ceiling. Beyond that, the entrepreneur bears the additional cost.

Advantages

• Budget control for the client
• Cost optimisation incentive

Disadvantages:

• Inclusion of a risk premium in the initial price
• Limited flexibility

Recommended use:

Complex projects with budgetary constraints (hospitals, headquarters)

5. Design & Build Contracts

Definition

The entrepreneur is responsible for both the design and construction.

Advantages

• Reduced lead times (fewer interfaces)
• Simplification for the customer
• Foster innovation

Disadvantages:

• Less client control over the design
• Higher initial cost

Recommended use:

Major projects (stadiums, airports, complex infrastructure)

6. Turnkey Contracts

Definition

The entrepreneur delivers an installation ready to use turnkey.

Advantages

• Minimal customer implication
• Maximum risk transfer

Disadvantages:

• High cost
• Poor flexibility

Recommended use:

Factories, power stations, data centres, industrial complexes

7. Public-Private Partnerships (PPPs)

Definition

Public-private partnership to finance, build and operate a project.

Advantages

• Reduction of the public financial burden
• Contribution of the private sector to efficiency

Disadvantages:

• Legal and financial complexity
• Risks of misalignment of interests

Recommended use:

Major infrastructure projects (motorways, rail, airports)

8. FIDIC Contracts (International Standard)

Contracts FIDIC are widely used in international EPC and infrastructure projects.

Main types:

• 🔴 Red Book Classic construction (client design)
• 🟡 Yellow Book Design & Build
• ⚪ Silver Book EPC / Turnkey (maximum contractor risk)
• 🟡 Gold Book → PPP with operation/maintenance
• 🟢 Green Book Simple projects / low risk
• 🟢 The Emerald Book → Underground works / tunnels

How to choose the right contract?

The choice depends on several key factors:

• Risk apportionment Client vs Contractor
• Project complexity defined versus uncertain
• Desired level of control
• Budget constraints

Conclusion (ALVID Strategic Vision)

The choice of contract is not administrative – it is a major strategic lever :

• Direct impact on the Claims & Disputes
• Influence the Planning and risk management structure
• Determine the Negotiating position

In EPC/Nuclear/HVDC projects:
The contract is the Foundation of any Delay & Claims strategy

Quel type de contrat utilisez-vous le plus dans vos projets ?
Have you ever made a bad contractual choice?