Some common types of payment regimes are:

•  Fixed price: These are typically used for straightforward contracts where the price for the delivery of the goods or services can be accurately determined. These payment regimes specify the exact amount(s) to be paid to the contractor for the successful performance of the contract.

•  Variable price: These arrangements allow for certain agreed contract costs to be varied over the life of the contract depending on agreed formula or indices. They are often used where contract costs are likely to vary due to factors beyond the contractor's control. This approach might be used in longer duration contracts where there are expected to be changes in the cost of labour or materials, or fluctuations in the exchange rate.

•  Cost or cost reimbursement: These arrangements allow the contractor to recover identifiable costs incurred during the performance of the contract, provided they do not exceed a pre determined ceiling. This type of payment regime can be useful when the maximum scope of the work can be estimated but the actual work involved cannot be accurately estimated. It is often used when there is high risk and uncertainty associated with the deliverables, such as when there are significant developmental aspects involved.

•  Variable quantity: These regimes allow for a maximum contract price to be agreed with such factors as labour rates, overheads and quantities also being agreed by the parties. These agreed rates may be firm or variable. These payment regimes are generally used where the level of labour effort required under the contract cannot be estimated with any degree of certainty.

•  Performance based: These involve the use of milestones and performance reviews to determine whether the contractor should receive the next portion of the total payment. If properly managed performance based payment regimes ensure that the contractor is providing the required quality on schedule and also help the acquiring entity to detect any potential problems with the contractor's performance prior to completion and final payment.

•  Incentive payments: These arrangements are intended to promote efficiency and productivity by offering the contractor a financial incentive for performance above that which can usually be achieved by the application of normal effort and skills in circumstances where this will add value to the outcome sought by the acquiring entity. Incentive payment regimes are generally used with milestone or cost reimbursement payment regimes. These payments arrangements are usually determined by reference to formulae contained within the contract, such as key performance indicators. If the specified performance targets are not reached the contractor forgoes any additional payment. Incentive payments may be used in difficult or high risk contracts or to direct effort to particular desired outcomes.

The contract should ensure that there is a legal right not to pay the contractor or to vary payments in circumstances where the contractor has not met their obligations.

The timing of contract payments and the conditions under which payments will be made need to be specified in the contract.