What are the 3 types of contracts?
You can’t do many projects to change something without spending a bit of cash.
And when money is involved, a contract is essential.
Generally you’ll come across one of three types of contract on a project: fixed price, cost-reimbursable (also called costs-plus) or time and materials..
How does a lump sum contract work?
A lump sum contract is a construction agreement in which the contractor agrees to complete the project for a predetermined, set price. Under a lump sum agreement, also known as a stipulated-sum, the contractor submits a total project price instead of bidding on each individual item.
When would you use a lump sum contract?
A lump-sum contract is normally used in the construction industry to reduce design and contract administration costs. It is called a lump-sum because the contractor is required to submit a total and global price instead of bidding on individual items.
What does lump sum contract mean?
stipulated sumA lump sum contract, sometimes called stipulated sum, is the most basic form of agreement between a contractor and a customer. A lump sum contract or a stipulated sum contract will require that the contractor agree to provide specified services for a stipulated or fixed price.
What are the advantages and disadvantages of contract?
Advantages and Disadvantages of ContractingGreater flexibility: When we ask our clients what they love about contracting, the improved flexibility on offer always comes up. … Increased earnings: … More opportunities for development: … More generally: … Responsibility: … Uncertainty: … Downtime between contracts:
What is the difference between fixed price and lump sum contract?
Under a lump sum contract, a single ‘lump sum’ price for all the works is agreed before the works begin. … It is defined as a fixed price contract, where the contractors agree to execute the work for a stated total sum of money.