Pricing Methodology

The Stabilizing Force

Regardless of the geotechnical contractor that you choose, there are several methods of pricing that you should be familiar with. Common types of pricing are lump sum, unit pricing, or time and materials.

Geotechnical work by its very nature involves risk. Each pricing method involves a strategy to deal with that risk. The types of risk are:

  • Technical – the risk related to the performance of the solution.
  • Quantity – the risk related to accurately estimating the scope of work.
  • Duration – the risk of predicting the time it will take to complete the work.

With lump sum pricing, the contractor takes all of the risk (technical, quantity, and duration). With unit pricing, such as charging by linear feet drilled or volume of grout pumped, the quantity risk is shifted to the client. Time and materials pricing is commonly used where the quantities are unknown and the speed of the work is affected by factors outside the contractor’s control. When time and materials pricing is used, the Client takes the quantity and duration risk. So, the price of a project is related to the level of risk that the contractor must take.

  • LUMP-SUM PRICING: Typically used on projects with a clearly defined scope of work. For example, soil nailing is commonly purchased on a lump sum basis when the quantity is very predictable.
  • UNIT PRICING: Is generally used on projects where the quantities are unpredictable. For instance, micropiles are frequently unit priced (i.e. by the drilled linear foot and by volume of grout pumped) since the depth to rock may differ from the expectations. Likewise, sinkhole remediation is commonly unit priced because of the unpredictable variations in depth and subsurface conditions.
  • TIME and MATERIALS PRICING: Is commonly used on projects that where the scope is difficult to define or very difficult to control. For instance, time and materials would be the preferred method for pricing a project where there was very little geotechnical information about the jobsite, or where other, higher priority activities on the site might suspend the contractor’s work suddenly, frequently and for unpredictable amounts of time.

Reputable contractors make it a priority to understand each client’s situation and to recommend the best solution. They are also willing to reduce the scope (and cost) of a project if the performance requirements can be met with a reduced scope of work.

At Rembco we provide complete design-build solutions. We suggest the best pricing strategy and recommend the most cost effective solution – even if our scope is reduced by doing so.