Local Agency Real Estates Professional Services Lump Sum Consultant Agreement 2025

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Under a lump sum contract, also known as a stipulated sum contract, the project owner provides explicit specifications for the work, and the contractor provides a fixed price for the project.
A consultancy agreement allows two parties to engage in a business relationship where one side works as an external consultant. A consultant can be either an individual or a company. Consultancy services can vary, but often they provide advice that is seen to be expert and helpful.
While lump sum contracts benefit from simplicity, they also present risks to both owners and contractors. Contractors may be incentivized to cut corners to stay under budget. May be on the hook for added costs due to change orders. Inaccurate estimating could cut into profit margin.
What Is a Lump Sum Contract? Under a lump sum contract, also known as a stipulated sum contract, the project owner provides explicit specifications for the work, and the contractor provides a fixed price for the project.
Lump sum agreements put all the construction costs out front, which may make it easier for project owners to fund them. Having a better idea of final project costs can help owners create budgets and apply for financing for projects by reducing the risk of ballooning construction costs.
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Contractors will carry much of the risk with a lump sum contract. With the exception of owner-initiated changes, if there are any cost overruns outside of the agreed fixed price, the contractor is responsible for those costs.

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