Bonus payments

An employer can include in a contract the payment of bonuses to the contractor for completion of the works, or stages of it, on or before the time or times stipulated in the contract. Provided the times set are reasonably achievable and do not encourage the contractor to skimp work, bonuses can be rewarding to both contractor and employer. Early completion can reduce borrowing costs for the employer since he can gain an income earlier from the project output.
Early completion also suits the contractor, since his overheads extend over less time and his profit on the job thereby increases.
The problem with bonuses is that, if unforeseen conditions occur causing the contractor a delay not of his own making, there may be a dispute about how much extra time should be allowed to him. Bonuses should therefore be a reasonable amount; not so large that they put the contractor on a win or lose situation in respect of his whole profit.

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