Contract Financial Performance Evaluation

Abstract

This study evaluates the financial performance of Type D contracts relative to other contract types used by Company XYZ in its construction projects. Although the Type D contract is the most frequently used due to its compatibility with multi-prime contracting in the Design-Bid- Build delivery method—which offers construction managers maximum control—it consistently underperforms in financial evaluations. Through a detailed analysis of financial data from completed projects, performance was assessed using two indicators: Change Order Percentage (COP) and Final Invoiced Percentage (FIP). Findings indicate that the Type D contract, despite its popularity, ranks least favorable in terms of financial performance. This underperformance is likely due to construction managers not managing these contracts effectively. The study recommends that construction managers should examine and improve the execution of Type D contracts to ensure they are managed as intended, thus enhancing financial outcomes. Additionally, it recommends that the construction department should standardize the practice of assessing COP and FIP indicators after each project completion to ensure consistent evaluation of performance metrics.