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Technical Department
Remediation Performance Guarantees: Say What?
By Ken Kastman, P.E.
Costs for large scale, complex brownfield remediation projects can easily spin
out of control. Early cost estimates that appeared reasonably accurate may prove
to be based on misleading information or assumptions.
Many remediation buyers are considering options to bring more certainty to the
remediation process, and are requesting remediation suppliers to consider some
form of performance guarantee, sometimes referred to as a performance based
contract (PBC).
Performance guarantee discussions have spawned a wide variety of inconsistently
used terms. A discussion of some terms follows:
Firm Fixed Price: A request of the remediation supplier to provide a total remediation cost that will not be exceeded.
The vehicle is typically a “not to exceed” contract for a given scope of services that are billed on a time and materials basis. The scope of remediation is specified in the contract; caveats for unexpected circumstances are common. This is typically viewed as a fair contract for both buyer and supplier, but does not protect well against unforeseen conditions.See Ken’s other recent articles:
Technology Can Lead to Financial Reward
Technology and the Property Value Chain
Sidebar
Confused? So are many potential buyers and suppliers. The NBA is conducting
research to assess the success of these risk-sharing mechanisms. If you have
information you would like to share please contact