Joint Venture and International Collaboration

Extract

The three preceding papers in this Symposium deal with the means of achieving and controlling cost effectiveness in GW projects. Given the availability of the means, there is still more which can be done to improve cost effectiveness; the contractual environment should encourage the use of these means.

It is, I think, generally accepted that cost plus contracts applied to development work can be non-conducive to cost effectiveness.

In an effort to provide a more satisfactory contractual environment, the Ministry of Aviation Supply flirted briefly with fixed price contracts, but these have now given way fairly generally to incentive contracts and latterly to contracts which move steadily from cost plus to incentive as the work proceeds. A parallel development has seen the study, and in some cases the actual negotiation of arrangements to spread the costs by sharing them between two or more “partners”. This has the two-fold objective of reducing the capital outlay for the Government and of creating pressure on those taking part to exercise sound cost control. I shall deal with three such arrangements and comment on some of their problems.