Determination of target costs
The remuneration promised to the implementation partners by the client in the alliance agreement is, in principle, an ordinary fee for work (or, in the case of services under contract law, an ordinary fee), which is paid in exchange for services to be provided within a certain period of time and in a certain quality.
What is non-traditional with the project alliance, however, is the way in which the amount of the actual remuneration to be paid is determined. Here, no classic price (lump sum, global, unit, hourly or direct price) is agreed, but rather the remuneration of all expenses actually incurred by the realization partners in the project. The amount of the jointly determined target costs plays a decisive role here. Full remuneration is only owed for those services whose costs fall within the scope of the target costs.
The target costs are calculated for the provision of services for the entire duration of the project alliance, i.e. including the costs for rectifying any defects after acceptance of the work. In order to manage the total target costs as transparently as possible, it is recommended that the total target costs be divided into two parts (see Figure 6):
- Target costs 1: all services up to acceptance of the work
- Target costs 2: all services for remedying defects after acceptance of the work
Determination of target costs 1
The target costs 1 are determined differently depending on the time at which the project alliance is entered into. In the early project phases, in which only a general project idea exists, these must be determined from typical parameters and the financial risk provision. An entrepreneurial calculation as a project budget for cost price reimbursement is not possible at this early stage.
Such a project budget, based on a business calculation (figure), can only be determined once the project is ready for implementation. This has to be worked out jointly by the alliance project team.
The financial risk provisioning to be taken into account in target cost 1 is derived from the jointly maintained risk register. The costs for risk-reducing and opportunity-increasing measures are taken into account in the work costs (see figure).
Determination of target costs 2
In most cases, the cost budget for target cost 2 is determined by adding surcharges to target cost 1 (as a percentage or flat rate) based on empirical values.
Only in special cases is the quantification of target costs 2 on the basis of a risk analysis and a corresponding business calculation appropriate. In such a calculation, the profit mark-up does not need to be taken into account, as there is only an entitlement to reimbursement of the cost price, but not to reimbursement of a profit mark-up.