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Lump sum contracts (also sometimes known as fixed price contracts) are usually considered the most popular type of contract when it comes to building and engineering agreements, however they do have minor differences.
Which type of contract is most commonly used?
Bilateral contracts are agreements in which both parties exchange mutual promises to perform certain obligations, making this type of contract the most common in business transactions.
What is the best contract for contractors?
Best Contract Types for Different Project Owners Government Owners: Lump Sum (Fixed-Price Contract) Private Developers: Cost-Plus with Guaranteed Maximum Price (GMP) Corporate Institutional Owners: Cost-Plus with Incentives. First-Time Owners: Lump Sum or Unit Price.
What is the best type of contract for construction?
A lump sum contract is a suitable if the scope and schedule of the project are sufficiently defined to allow the contractor to fully estimate project costs. In a unit price contract, the work to be performed is broken into various parts, usually by construction trade.
Which type of contract is more risky for the contractor?
Fixed Price Contract With a Fixed Price Contract, the government agrees to pay you a specific pre-determined price for your product or service. This type of contract is more risky for the contractor as you would be responsible for any cost overruns.
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