If you are sure you have done your homework, a lump sum contract could be very fair and beneficial to both you and the project owner. A lump sum contract is an important contract that must be used when the requested work is clearly defined and construction designs are completed. The lump sum agreement will reduce the risk of ownership and the contractor will have more control over profit expectations. It is also a preferred choice when stable field conditions, comprehensive pre-construction studies and evaluations are completed and the contractor has analyzed these documents. The agreed sum contract may, if the agreed parties, include certain unit prices for items with indeterminate quantities and the abatement to cover unexpected conditions. The time to award these types of contracts is also longer; However, it will minimize modification tasks during construction. Contractors like lump sum contracts because they offer some autonomy and freedom to complete the job. Owners like contract contracts because the owners know exactly what the project will cost in the end. You don`t have to worry about excessive working hours or equipment supplements.
The price is what it is. MSC`s complaint was dismissed because the nature of the project has changed so that the contractor`s approach of treating certain elements of the project on a value and measurement basis is acceptable, as its decision not to modify the preliminary work is not inconsistent with that of a lump sum contract. Lump-sum contracts are a great tool for odd jobs and very simple projects. However, lump sum contracts could ultimately result in major litigation and contractual document requirements. The most common arguments are that sometimes a unit price contract for certain parts of the project is combined with a contract contract or mixed with other types of contracts. A bidder may only be asked to indicate flat prices for certain clearly defined items, such as the mobilization and demobilization of dredging facilities. The correct calculation of the contractual rates of the dredging project, whether calculated as a unit cost or a flat rate, is crucial. There is also no incentive for early completion of the project. Work is a direct cost, i.e. the more hours of work on the project, the higher the benefit. With a lump sum contract, the contractor benefits from the early purpose and entry into the next project. The lump sum contract is the simplest and simplest, because the volume of work is clearly defined and the total cost is already known.
This can help foster better interaction between owners and contractors. As has already been said, there is a need to reduce accounting and reporting, which reduces the red tape that contractors face. Projects that progress under a lump sum contract have, by their very nature, very few paper requirements.