Engineering and Construction contracts have been using ‘blended rates’ for a very long time. The recent trend of the usage of this term is disruptive in terms of terminology: new acronyms or new words are used to change the old concept.
The new concept of an all-encompassing blended rate appears to be simplifying contract management, but this new approach requires strict estimating protocols to make sure that they reflect the actual costs. In our new Expert paper 2018-01 “How to use Blended Rates appropriately in Project Contracts” by Saty Satyamurti we describe the content of Blended Rates and in which contact their usage should be restricted.
Recently Consulting Engineers and Construction Contractors have opted to use one single rate, which is called the “Blended Rate” for all the work performed under a single project. This approach is also favored by government as a simplifying approach. In other words the billing is easy, just compute the number of hours spent by all personnel working on the design, drawing, checking, approving and releasing the final product for construction and multiply by ‘one single rate’ to forward to the Client for payment.
The “Blended Rate” application is a worthwhile simplifying move on small short-term project like Software Developments, initial Viability and Feasibility Study, Computer Modeling, Visualization of a large project and low cost short term projects.
However, on large and long multimillion and billion dollars contracts, Consulting Engineers and Construction Contractors should sign contract in the old-fashioned way where talented people have each an adapted applicable rate. Every project needs a careful evaluation as to the benefit of using blended rate and the advantages.
Read more about Blended Rates in our new Expert paper 2018-01 “How to use Blended Rates appropriately in Project Contracts”
If you can’t access the link to the white paper, copy and paste the following link in your browser: http://www.projectvaluedelivery.com/expert/PVD_Expert_2018-01_Blended_Rates_v0b.pdf
