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Lump sum contract example

Lump sum contract template 2025

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The document outlines a sample lump sum contract for debris removal, detailing the agreement between a city/county (ENTITY) and a contractor. It specifies the scope of work, which includes cleanup and removal of hazards following a disaster, and defines two methods for pricing: Area Method and Pass Method. Key articles cover the schedule of work, payment terms, change orders, and obligations of both parties. The contract emphasizes timely completion and safety responsibilities.

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What is an example of a lump sum contract?

Lets consider a municipal government that is planning to build new roads. With a lump sum contract, the government agrees to pay a fixed price for the entire project. This approach ensures budget certainty because the total cost is known from the start. Its ideal for projects with well-defined scopes.

What are the disadvantages of a lump sum contract?

Disadvantages professionals might experience with using this contract type include: Increased contractor risk: In this kind of contract, the contractor takes full responsibility for the projects completion. Higher contract pricing: Contractors usually overestimate the cost in a lump sum contract.

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