Lump sum contract - Revision history

Designing Buildings at 09:10, 11 July 2022

2022-07-11T09:10:19Z

← Older revision		Revision as of 09:10, 11 July 2022
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	* Loss and expense.		* Loss and expense.
	* Lump sum contract - pros and cons.		* Lump sum contract - pros and cons.
		+	* Lump sum cost.
	* Measurement contract.		* Measurement contract.
	* Nominated sub-contractors.		* Nominated sub-contractors.

Designing Buildings: Reverted edits by 94.5.190.212 (talk) to last revision by Editor

2022-02-20T20:19:43Z

Reverted edits by 94.5.190.212 (talk) to last revision by Editor

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94.5.190.212 at 19:58, 20 February 2022

2022-02-20T19:58:06Z

← Older revision		Revision as of 19:58, 20 February 2022
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		+	= Lump sum contract =

		+	A lump sum contract (or [https://www.designingbuildings.co.uk/wiki/Stipulated_sum_contract stipulated sum contract]) is the [https://www.designingbuildings.co.uk/wiki/Traditional traditional] means of [https://www.designingbuildings.co.uk/wiki/Procuring procuring] [https://www.designingbuildings.co.uk/wiki/Construction construction], and still the most [https://www.designingbuildings.co.uk/wiki/Common common] [https://www.designingbuildings.co.uk/wiki/Form form] of [https://www.designingbuildings.co.uk/wiki/Construction_contracts construction contract]. Under a lump sum contract, a single ‘[https://www.designingbuildings.co.uk/wiki/Lump_sum lump sum]’ [https://www.designingbuildings.co.uk/wiki/Price price] for all the [https://www.designingbuildings.co.uk/wiki/Works works] is agreed before the [https://www.designingbuildings.co.uk/wiki/Works works] begin.

−	[[Category:DCN_Definition]]	+	It is defined in the [https://www.designingbuildings.co.uk/wiki/CIOB CIOB] [https://www.designingbuildings.co.uk/wiki/Code_of_estimating_practice Code of Estimating Practice] as, ‘a [https://www.designingbuildings.co.uk/wiki/Fixed_price_contract fixed price contract] where [https://www.designingbuildings.co.uk/wiki/Contractors contractors] undertake to be [https://www.designingbuildings.co.uk/wiki/Responsible responsible] for executing the [https://www.designingbuildings.co.uk/wiki/Complete complete] [https://www.designingbuildings.co.uk/wiki/Contract contract] [https://www.designingbuildings.co.uk/wiki/Works work] for a stated total sum of money.’
−	[[Category:DCN_Guidance]]	+
−	[[Category:Contracts_/_payment]]	+	This is generally appropriate where the [https://www.designingbuildings.co.uk/wiki/Project project] is well defined, when [https://www.designingbuildings.co.uk/wiki/Tenders tenders] are sought, and significant changes to requirements are unlikely. This means that the [https://www.designingbuildings.co.uk/wiki/Contractors contractor] is able to accurately [https://www.designingbuildings.co.uk/wiki/Price price] the [https://www.designingbuildings.co.uk/wiki/Works works] they are being asked to carry out.
−	[[Category:Cost_/_business_planning]]	+
−	[[Category:Procurement]]	+	Lump sum contracts might be less appropriate where speed is important, or where the nature of the [https://www.designingbuildings.co.uk/wiki/Works works] is not well defined. Other [https://www.designingbuildings.co.uk/wiki/Form forms] of [https://www.designingbuildings.co.uk/wiki/Contract contract] that might be more appropriate in such circumstances include [https://www.designingbuildings.co.uk/wiki/Measurement_contract measurement contracts] (used where the [https://www.designingbuildings.co.uk/wiki/Works works] can be described in reasonable [https://www.designingbuildings.co.uk/wiki/Details detail], but the amount cannot), [https://www.designingbuildings.co.uk/wiki/Cost_reimbursement_contracts cost reimbursement contracts] (used where the nature of the [https://www.designingbuildings.co.uk/wiki/Works works] cannot be properly defined at the outset, often used where an immediate start [https://www.designingbuildings.co.uk/wiki/On_site on site] is required), [https://www.designingbuildings.co.uk/wiki/Target_cost_contract target cost contracts], and so on (see [https://www.designingbuildings.co.uk/wiki/Procurement_routes Procurement route] for more [https://www.designingbuildings.co.uk/wiki/Information information]).
		+
		+	Lump sum contracts apportion more [https://www.designingbuildings.co.uk/wiki/Risk risk] to the [https://www.designingbuildings.co.uk/wiki/Contractors contractor] than some other [https://www.designingbuildings.co.uk/wiki/Form forms] of [https://www.designingbuildings.co.uk/wiki/Contract contract], as there are fewer mechanisms to allow them to vary their [https://www.designingbuildings.co.uk/wiki/Price price], and they give the [https://www.designingbuildings.co.uk/wiki/Clients client] some [https://www.designingbuildings.co.uk/wiki/Certainty certainty] about the likely [https://www.designingbuildings.co.uk/wiki/Cost cost] of the [https://www.designingbuildings.co.uk/wiki/Works works]. The [https://www.designingbuildings.co.uk/wiki/Tender_processes tender process] will tend to be slower than for other [https://www.designingbuildings.co.uk/wiki/Form forms] of [https://www.designingbuildings.co.uk/wiki/Contract contract] and preparing a [https://www.designingbuildings.co.uk/wiki/Tenders tender] may be more expensive for the [https://www.designingbuildings.co.uk/wiki/Contractors contractor].
		+
		+	However, a lump sum contract does not give all the [https://www.designingbuildings.co.uk/wiki/Project_risk project risk] to the [https://www.designingbuildings.co.uk/wiki/Contractors contractor], and it is not a [https://www.designingbuildings.co.uk/wiki/Fixed_price fixed price], or even a [https://www.designingbuildings.co.uk/wiki/Guaranteed_maximum_price guaranteed maximum price]. The [https://www.designingbuildings.co.uk/wiki/Price price] of a lump sum contract can change.
		+
		+	Mechanisms for varying the [https://www.designingbuildings.co.uk/wiki/Contract_sum contract sum] on a lump sum contract include:
		+
		+	* [https://www.designingbuildings.co.uk/wiki/Variation Variations]: These are changes in the nature of the [https://www.designingbuildings.co.uk/wiki/Works works]. Most [https://www.designingbuildings.co.uk/wiki/Contract contracts] will contain provision for the [https://www.designingbuildings.co.uk/wiki/Architects architect] or [https://www.designingbuildings.co.uk/wiki/Contract_administrator contract administrator] to [https://www.designingbuildings.co.uk/wiki/Issue issue] [https://www.designingbuildings.co.uk/wiki/Instruction instructions] to vary the [https://www.designingbuildings.co.uk/wiki/Design design], [https://www.designingbuildings.co.uk/wiki/Quantity quantities], [https://www.designingbuildings.co.uk/wiki/Quality quality], sequence or working [https://www.designingbuildings.co.uk/wiki/Condition conditions].
		+	* [https://www.designingbuildings.co.uk/wiki/Relevant_event Relevant events]: A [https://www.designingbuildings.co.uk/wiki/Relevant_event relevant event] may be caused by the [https://www.designingbuildings.co.uk/wiki/Clients client] (for example, [https://www.designingbuildings.co.uk/wiki/Failure failure] to [https://www.designingbuildings.co.uk/wiki/Supplies supply] [https://www.designingbuildings.co.uk/wiki/Goods goods] or [https://www.designingbuildings.co.uk/wiki/Instruction instructions]), or may be a [https://www.designingbuildings.co.uk/wiki/Neutral_event neutral event] (such as [https://www.designingbuildings.co.uk/wiki/Exceptionally_adverse_weather exceptionally adverse weather]) and may result in a [https://www.designingbuildings.co.uk/wiki/Claims claim] for [https://www.designingbuildings.co.uk/wiki/Loss_and_expense loss and expense] by the [https://www.designingbuildings.co.uk/wiki/Contractors contractor].
		+	* [https://www.designingbuildings.co.uk/wiki/Provisional_sum Provisional sums]: An allowance for a specific [https://www.designingbuildings.co.uk/wiki/Element element] of the [https://www.designingbuildings.co.uk/wiki/Works works] that is not defined in enough [https://www.designingbuildings.co.uk/wiki/Details detail] for [https://www.designingbuildings.co.uk/wiki/Tenderer tenderers] to [https://www.designingbuildings.co.uk/wiki/Price price].
		+	* [https://www.designingbuildings.co.uk/wiki/Fluctuation Fluctuations]: A mechanism for dealing with [https://www.designingbuildings.co.uk/wiki/Inflation inflation] on [https://www.designingbuildings.co.uk/wiki/Project projects] that may last for several years where the [https://www.designingbuildings.co.uk/wiki/Contractors contractor][https://www.designingbuildings.co.uk/wiki/Tenders tenders] based on current [https://www.designingbuildings.co.uk/wiki/Price prices] and then the [https://www.designingbuildings.co.uk/wiki/Contract contract] makes provisions for the [https://www.designingbuildings.co.uk/wiki/Contractors contractor] to be reimbursed for [https://www.designingbuildings.co.uk/wiki/Price price]changes over the [https://www.designingbuildings.co.uk/wiki/Duration duration] of the [https://www.designingbuildings.co.uk/wiki/Project project].
		+	* [https://www.designingbuildings.co.uk/wiki/Payments_to_nominated_sub-contractors Payments to nominated sub-contractors] or [https://www.designingbuildings.co.uk/wiki/Nominated_supplier nominated suppliers].
		+	* [https://www.designingbuildings.co.uk/wiki/Statutory_fees Statutory fees].
		+	* [https://www.designingbuildings.co.uk/wiki/Payment Payments] relating to the [https://www.designingbuildings.co.uk/wiki/Opening_up_works_for_inspection_and_testing opening up works for inspection and testing].
		+
		+	The better defined the [https://www.designingbuildings.co.uk/wiki/Works works] are when the [https://www.designingbuildings.co.uk/wiki/Contract contract] is agreed, the less likely it is that the [https://www.designingbuildings.co.uk/wiki/Contract_sum contract sum] will change.
		+
		+	It is important to recognise that a truly 'fixed' [https://www.designingbuildings.co.uk/wiki/Price price] [https://www.designingbuildings.co.uk/wiki/Contract contract] would not necessarily be in the interests of the [https://www.designingbuildings.co.uk/wiki/Clients client] as it would require that the [https://www.designingbuildings.co.uk/wiki/Contractors contractor] [https://www.designingbuildings.co.uk/wiki/Price price] [https://www.designingbuildings.co.uk/wiki/Risk risks] over which they may have no control, and which might not arise. It would also give very little [https://www.designingbuildings.co.uk/wiki/Scope scope] for the [https://www.designingbuildings.co.uk/wiki/Clients client] to alter their requirements.
		+
		+	Advantages of lump sum contracts:
		+
		+	* [https://www.designingbuildings.co.uk/wiki/Client%27s Client's] [https://www.designingbuildings.co.uk/wiki/Risk risk] is minimal.
		+	* Fewer [https://www.designingbuildings.co.uk/wiki/Variations variations].
		+	* The [https://www.designingbuildings.co.uk/wiki/Clients client] can arrange [https://www.designingbuildings.co.uk/wiki/Capital capital] according to the [https://www.designingbuildings.co.uk/wiki/Payment payment] [https://www.designingbuildings.co.uk/wiki/Plan plan].
		+	* [https://www.designingbuildings.co.uk/wiki/Contractors Contractor's] [https://www.designingbuildings.co.uk/wiki/Cash_flow cash flow] is predictable.
		+	* The [https://www.designingbuildings.co.uk/wiki/Tendering_process tendering process] is more [https://www.designingbuildings.co.uk/wiki/Transparent transparent] and [https://www.designingbuildings.co.uk/wiki/Impartial impartial].
		+
		+	Disadvantages of lump sum contracts:
		+
		+	* [https://www.designingbuildings.co.uk/wiki/Contractors Contractors] [https://www.designingbuildings.co.uk/wiki/Risk risk] is high (poor [https://www.designingbuildings.co.uk/wiki/Productivity productivity] and mismanagement can [https://www.designingbuildings.co.uk/wiki/Lead lead] the [https://www.designingbuildings.co.uk/wiki/Project project] into a [https://www.designingbuildings.co.uk/wiki/Loss loss]).
		+	* Poor [https://www.designingbuildings.co.uk/wiki/Details details] and specs in the [https://www.designingbuildings.co.uk/wiki/Design design] can [https://www.designingbuildings.co.uk/wiki/Lead lead] to [https://www.designingbuildings.co.uk/wiki/Project project] [https://www.designingbuildings.co.uk/wiki/Disputes disputes].
		+	* [https://www.designingbuildings.co.uk/wiki/Delay Delays] in the [https://www.designingbuildings.co.uk/wiki/Client%27s client's] [https://www.designingbuildings.co.uk/wiki/Financing financing] can [https://www.designingbuildings.co.uk/wiki/Delay delay] the [https://www.designingbuildings.co.uk/wiki/Project project].
		+	* The [https://www.designingbuildings.co.uk/wiki/Design design] should be [https://www.designingbuildings.co.uk/wiki/Complete complete] and available before the pre-[https://www.designingbuildings.co.uk/wiki/Contract contract] process.
		+	* [https://www.designingbuildings.co.uk/wiki/Procurement Procurement] times can be long.
		+
		+	See also: [https://www.designingbuildings.co.uk/wiki/Lump_sum_contract_-_pros_and_cons Lump sum contract - pros and cons].
		+
		+	= Related articles on [https://www.designingbuildings.co.uk/wiki/Designing Designing] [https://www.designingbuildings.co.uk/wiki/Building Buildings] =
		+
		+	* [https://www.designingbuildings.co.uk/wiki/Contract_sum Contract sum].
		+	* [https://www.designingbuildings.co.uk/wiki/Difference_between_lump_sum_and_measurement_contracts Difference between lump sum and measurement contracts].
		+	* [https://www.designingbuildings.co.uk/wiki/Evaluation_of_claims Evaluation of claims].
		+	* [https://www.designingbuildings.co.uk/wiki/Firm_price_contract Firm price contract].
		+	* [https://www.designingbuildings.co.uk/wiki/Fixed_price_contract Fixed price contract].
		+	* [https://www.designingbuildings.co.uk/wiki/Fluctuations Fluctuations].
		+	* [https://www.designingbuildings.co.uk/wiki/Force_account_work Force account work].
		+	* [https://www.designingbuildings.co.uk/wiki/Guaranteed_maximum_price Guaranteed maximum price]
		+	* [https://www.designingbuildings.co.uk/wiki/Loss_and_expense Loss and expense].
		+	* [https://www.designingbuildings.co.uk/wiki/Lump_sum_contract_-_pros_and_cons Lump sum contract - pros and cons].
		+	* [https://www.designingbuildings.co.uk/wiki/Measurement_contract Measurement contract].
		+	* [https://www.designingbuildings.co.uk/wiki/Nominated_sub-contractor Nominated sub-contractors].
		+	* [https://www.designingbuildings.co.uk/wiki/Procurement_routes Procurement route].
		+	* [https://www.designingbuildings.co.uk/wiki/Provisional_sums Provisional sums].
		+	* [https://www.designingbuildings.co.uk/wiki/Relevant_events Relevant events].
		+	* [https://www.designingbuildings.co.uk/wiki/Target_cost_contract Target cost contract].
		+	* [https://www.designingbuildings.co.uk/wiki/Variations Variations].
		+	* [https://www.designingbuildings.co.uk/wiki/Without_quantities Without quantities].
		+
		+	[[Category:DCN_Definition]] [[Category:DCN_Guidance]] [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]] [[Category:Procurement]]

94.5.190.212: Undo revision 225647 by [[Special:Contributions/[IP address hidden]|[IP address hidden]]] ([[User talk:[IP address hidden]|talk]])

2022-02-20T19:57:44Z

Undo revision 225647 by [[Special:Contributions/[IP address hidden]|[IP address hidden]]] ([[User talk:[IP address hidden]|talk]])

← Older revision		Revision as of 19:57, 20 February 2022
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−	~~= Lump sum contract =~~

−	A lump sum contract (or [https://www.designingbuildings.co.uk/wiki/Stipulated_sum_contract stipulated sum contract]) is the [https://www.designingbuildings.co.uk/wiki/Traditional traditional] means of [https://www.designingbuildings.co.uk/wiki/Procuring procuring] [https://www.designingbuildings.co.uk/wiki/Construction construction], and still the most [https://www.designingbuildings.co.uk/wiki/Common common] [https://www.designingbuildings.co.uk/wiki/Form form] of [https://www.designingbuildings.co.uk/wiki/Construction_contracts construction contract]. Under a lump sum contract, a single ‘[https://www.designingbuildings.co.uk/wiki/Lump_sum lump sum]’ [https://www.designingbuildings.co.uk/wiki/Price price] for all the [https://www.designingbuildings.co.uk/wiki/Works works] is agreed before the [https://www.designingbuildings.co.uk/wiki/Works works] begin.

−	It is defined in the [https://www.designingbuildings.co.uk/wiki/CIOB CIOB] [https://www.designingbuildings.co.uk/wiki/Code_of_estimating_practice Code of Estimating Practice] as, ‘a [https://www.designingbuildings.co.uk/wiki/Fixed_price_contract fixed price contract] where [https://www.designingbuildings.co.uk/wiki/Contractors contractors] undertake to be [https://www.designingbuildings.co.uk/wiki/Responsible responsible] for executing the [https://www.designingbuildings.co.uk/wiki/Complete complete] [https://www.designingbuildings.co.uk/wiki/Contract contract] [https://www.designingbuildings.co.uk/wiki/Works work] for a stated total sum of money.’	+	[[Category:DCN_Definition]]
−		+	[[Category:DCN_Guidance]]
−	This is generally appropriate where the [https://www.designingbuildings.co.uk/wiki/Project project] is well defined, when [https://www.designingbuildings.co.uk/wiki/Tenders tenders] are sought, and significant changes to requirements are unlikely. This means that the [https://www.designingbuildings.co.uk/wiki/Contractors contractor] is able to accurately [https://www.designingbuildings.co.uk/wiki/Price price] the [https://www.designingbuildings.co.uk/wiki/Works works] they are being asked to carry out.	+	[[Category:Contracts_/_payment]]
−		+	[[Category:Cost_/_business_planning]]
−	Lump sum contracts might be less appropriate where speed is important, or where the nature of the [https://www.designingbuildings.co.uk/wiki/Works works] is not well defined. Other [https://www.designingbuildings.co.uk/wiki/Form forms] of [https://www.designingbuildings.co.uk/wiki/Contract contract] that might be more appropriate in such circumstances include [https://www.designingbuildings.co.uk/wiki/Measurement_contract measurement contracts] (used where the [https://www.designingbuildings.co.uk/wiki/Works works] can be described in reasonable [https://www.designingbuildings.co.uk/wiki/Details detail], but the amount cannot), [https://www.designingbuildings.co.uk/wiki/Cost_reimbursement_contracts cost reimbursement contracts] (used where the nature of the [https://www.designingbuildings.co.uk/wiki/Works works] cannot be properly defined at the outset, often used where an immediate start [https://www.designingbuildings.co.uk/wiki/On_site on site] is required), [https://www.designingbuildings.co.uk/wiki/Target_cost_contract target cost contracts], and so on (see [https://www.designingbuildings.co.uk/wiki/Procurement_routes Procurement route] for more [https://www.designingbuildings.co.uk/wiki/Information information]).	+	[[Category:Procurement]]
−		+
−	Lump sum contracts apportion more [https://www.designingbuildings.co.uk/wiki/Risk risk] to the [https://www.designingbuildings.co.uk/wiki/Contractors contractor] than some other [https://www.designingbuildings.co.uk/wiki/Form forms] of [https://www.designingbuildings.co.uk/wiki/Contract contract], as there are fewer mechanisms to allow them to vary their [https://www.designingbuildings.co.uk/wiki/Price price], and they give the [https://www.designingbuildings.co.uk/wiki/Clients client] some [https://www.designingbuildings.co.uk/wiki/Certainty certainty] about the likely [https://www.designingbuildings.co.uk/wiki/Cost cost] of the [https://www.designingbuildings.co.uk/wiki/Works works]. The [https://www.designingbuildings.co.uk/wiki/Tender_processes tender process] will tend to be slower than for other [https://www.designingbuildings.co.uk/wiki/Form forms] of [https://www.designingbuildings.co.uk/wiki/Contract contract] and preparing a [https://www.designingbuildings.co.uk/wiki/Tenders tender] may be more expensive for the [https://www.designingbuildings.co.uk/wiki/Contractors contractor].	+
−		+
−	However, a lump sum contract does not give all the [https://www.designingbuildings.co.uk/wiki/Project_risk project risk] to the [https://www.designingbuildings.co.uk/wiki/Contractors contractor], and it is not a [https://www.designingbuildings.co.uk/wiki/Fixed_price fixed price], or even a [https://www.designingbuildings.co.uk/wiki/Guaranteed_maximum_price guaranteed maximum price]. The [https://www.designingbuildings.co.uk/wiki/Price price] of a lump sum contract can change.	+
−		+
−	~~Mechanisms for varying the [https://www.designingbuildings.co.uk/wiki/Contract_sum contract sum] on a lump sum contract include:~~	+
−		+
−	* [https://www.designingbuildings.co.uk/wiki/Variation Variations]: These are changes in the nature of the [https://www.designingbuildings.co.uk/wiki/Works works]. Most [https://www.designingbuildings.co.uk/wiki/Contract contracts] will contain provision for the [https://www.designingbuildings.co.uk/wiki/Architects architect] or [https://www.designingbuildings.co.uk/wiki/Contract_administrator contract administrator] to [https://www.designingbuildings.co.uk/wiki/Issue issue] [https://www.designingbuildings.co.uk/wiki/Instruction instructions] to vary the [https://www.designingbuildings.co.uk/wiki/Design design], [https://www.designingbuildings.co.uk/wiki/Quantity quantities], [https://www.designingbuildings.co.uk/wiki/Quality quality], sequence or working [https://www.designingbuildings.co.uk/wiki/Condition conditions].	+
−	* [https://www.designingbuildings.co.uk/wiki/Relevant_event Relevant events]: A [https://www.designingbuildings.co.uk/wiki/Relevant_event relevant event] may be caused by the [https://www.designingbuildings.co.uk/wiki/Clients client] (for example, [https://www.designingbuildings.co.uk/wiki/Failure failure] to [https://www.designingbuildings.co.uk/wiki/Supplies supply] [https://www.designingbuildings.co.uk/wiki/Goods goods] or [https://www.designingbuildings.co.uk/wiki/Instruction instructions]), or may be a [https://www.designingbuildings.co.uk/wiki/Neutral_event neutral event] (such as [https://www.designingbuildings.co.uk/wiki/Exceptionally_adverse_weather exceptionally adverse weather]) and may result in a [https://www.designingbuildings.co.uk/wiki/Claims claim] for [https://www.designingbuildings.co.uk/wiki/Loss_and_expense loss and expense] by the [https://www.designingbuildings.co.uk/wiki/Contractors contractor].	+
−	* [https://www.designingbuildings.co.uk/wiki/Provisional_sum Provisional sums]: An allowance for a specific [https://www.designingbuildings.co.uk/wiki/Element element] of the [https://www.designingbuildings.co.uk/wiki/Works works] that is not defined in enough [https://www.designingbuildings.co.uk/wiki/Details detail] for [https://www.designingbuildings.co.uk/wiki/Tenderer tenderers] to [https://www.designingbuildings.co.uk/wiki/Price price].	+
−	* [https://www.designingbuildings.co.uk/wiki/Fluctuation Fluctuations]: A mechanism for dealing with [https://www.designingbuildings.co.uk/wiki/Inflation inflation] on [https://www.designingbuildings.co.uk/wiki/Project projects] that may last for several years where the [https://www.designingbuildings.co.uk/wiki/Contractors contractor][https://www.designingbuildings.co.uk/wiki/Tenders tenders] based on current [https://www.designingbuildings.co.uk/wiki/Price prices] and then the [https://www.designingbuildings.co.uk/wiki/Contract contract] makes provisions for the [https://www.designingbuildings.co.uk/wiki/Contractors contractor] to be reimbursed for [https://www.designingbuildings.co.uk/wiki/Price price]changes over the [https://www.designingbuildings.co.uk/wiki/Duration duration] of the [https://www.designingbuildings.co.uk/wiki/Project project].	+
−	* [https://www.designingbuildings.co.uk/wiki/Payments_to_nominated_sub-contractors Payments to nominated sub-contractors] or [https://www.designingbuildings.co.uk/wiki/Nominated_supplier nominated suppliers].	+
−	* [https://www.designingbuildings.co.uk/wiki/Statutory_fees Statutory fees].	+
−	* [https://www.designingbuildings.co.uk/wiki/Payment Payments] relating to the [https://www.designingbuildings.co.uk/wiki/Opening_up_works_for_inspection_and_testing opening up works for inspection and testing].	+
−		+
−	The better defined the [https://www.designingbuildings.co.uk/wiki/Works works] are when the [https://www.designingbuildings.co.uk/wiki/Contract contract] is agreed, the less likely it is that the [https://www.designingbuildings.co.uk/wiki/Contract_sum contract sum] will change.	+
−		+
−	It is important to recognise that a truly 'fixed' [https://www.designingbuildings.co.uk/wiki/Price price] [https://www.designingbuildings.co.uk/wiki/Contract contract] would not necessarily be in the interests of the [https://www.designingbuildings.co.uk/wiki/Clients client] as it would require that the [https://www.designingbuildings.co.uk/wiki/Contractors contractor] [https://www.designingbuildings.co.uk/wiki/Price price] [https://www.designingbuildings.co.uk/wiki/Risk risks] over which they may have no control, and which might not arise. It would also give very little [https://www.designingbuildings.co.uk/wiki/Scope scope] for the [https://www.designingbuildings.co.uk/wiki/Clients client] to alter their requirements.	+
−		+
−	~~Advantages of lump sum contracts:~~	+
−		+
−	* [https://www.designingbuildings.co.uk/wiki/Client%27s Client's] [https://www.designingbuildings.co.uk/wiki/Risk risk] is minimal.	+
−	* Fewer [https://www.designingbuildings.co.uk/wiki/Variations variations].	+
−	* The [https://www.designingbuildings.co.uk/wiki/Clients client] can arrange [https://www.designingbuildings.co.uk/wiki/Capital capital] according to the [https://www.designingbuildings.co.uk/wiki/Payment payment] [https://www.designingbuildings.co.uk/wiki/Plan plan].	+
−	* [https://www.designingbuildings.co.uk/wiki/Contractors Contractor's] [https://www.designingbuildings.co.uk/wiki/Cash_flow cash flow] is predictable.	+
−	* The [https://www.designingbuildings.co.uk/wiki/Tendering_process tendering process] is more [https://www.designingbuildings.co.uk/wiki/Transparent transparent] and [https://www.designingbuildings.co.uk/wiki/Impartial impartial].	+
−		+
−	~~Disadvantages of lump sum contracts:~~	+
−		+
−	* [https://www.designingbuildings.co.uk/wiki/Contractors Contractors] [https://www.designingbuildings.co.uk/wiki/Risk risk] is high (poor [https://www.designingbuildings.co.uk/wiki/Productivity productivity] and mismanagement can [https://www.designingbuildings.co.uk/wiki/Lead lead] the [https://www.designingbuildings.co.uk/wiki/Project project] into a [https://www.designingbuildings.co.uk/wiki/Loss loss]).	+
−	* Poor [https://www.designingbuildings.co.uk/wiki/Details details] and specs in the [https://www.designingbuildings.co.uk/wiki/Design design] can [https://www.designingbuildings.co.uk/wiki/Lead lead] to [https://www.designingbuildings.co.uk/wiki/Project project] [https://www.designingbuildings.co.uk/wiki/Disputes disputes].	+
−	* [https://www.designingbuildings.co.uk/wiki/Delay Delays] in the [https://www.designingbuildings.co.uk/wiki/Client%27s client's] [https://www.designingbuildings.co.uk/wiki/Financing financing] can [https://www.designingbuildings.co.uk/wiki/Delay delay] the [https://www.designingbuildings.co.uk/wiki/Project project].	+
−	* The [https://www.designingbuildings.co.uk/wiki/Design design] should be [https://www.designingbuildings.co.uk/wiki/Complete complete] and available before the pre-[https://www.designingbuildings.co.uk/wiki/Contract contract] process.	+
−	* [https://www.designingbuildings.co.uk/wiki/Procurement Procurement] times can be long.	+
−		+
−	~~See also: [https://www.designingbuildings.co.uk/wiki/Lump_sum_contract_-_pros_and_cons Lump sum contract - pros and cons].~~	+
−		+
−	~~= Related articles on [https://www.designingbuildings.co.uk/wiki/Designing Designing] [https://www.designingbuildings.co.uk/wiki/Building Buildings] =~~	+
−		+
−	* [https://www.designingbuildings.co.uk/wiki/Contract_sum Contract sum].	+
−	* [https://www.designingbuildings.co.uk/wiki/Difference_between_lump_sum_and_measurement_contracts Difference between lump sum and measurement contracts].	+
−	* [https://www.designingbuildings.co.uk/wiki/Evaluation_of_claims Evaluation of claims].	+
−	* [https://www.designingbuildings.co.uk/wiki/Firm_price_contract Firm price contract].	+
−	* [https://www.designingbuildings.co.uk/wiki/Fixed_price_contract Fixed price contract].	+
−	* [https://www.designingbuildings.co.uk/wiki/Fluctuations Fluctuations].	+
−	* [https://www.designingbuildings.co.uk/wiki/Force_account_work Force account work].	+
−	* [https://www.designingbuildings.co.uk/wiki/Guaranteed_maximum_price Guaranteed maximum price]	+
−	* [https://www.designingbuildings.co.uk/wiki/Loss_and_expense Loss and expense].	+
−	* [https://www.designingbuildings.co.uk/wiki/Lump_sum_contract_-_pros_and_cons Lump sum contract - pros and cons].	+
−	* [https://www.designingbuildings.co.uk/wiki/Measurement_contract Measurement contract].	+
−	* [https://www.designingbuildings.co.uk/wiki/Nominated_sub-contractor Nominated sub-contractors].	+
−	* [https://www.designingbuildings.co.uk/wiki/Procurement_routes Procurement route].	+
−	* [https://www.designingbuildings.co.uk/wiki/Provisional_sums Provisional sums].	+
−	* [https://www.designingbuildings.co.uk/wiki/Relevant_events Relevant events].	+
−	* [https://www.designingbuildings.co.uk/wiki/Target_cost_contract Target cost contract].	+
−	* [https://www.designingbuildings.co.uk/wiki/Variations Variations].	+
−	* [https://www.designingbuildings.co.uk/wiki/Without_quantities Without quantities].	+
−		+
−	[[Category:DCN_Definition]] [[Category:DCN_Guidance]] [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]] [[Category:Procurement]]	+

94.5.190.212 at 19:56, 20 February 2022

2022-02-20T19:56:49Z

← Older revision		Revision as of 19:56, 20 February 2022
Line 1:		Line 1:
		+	= Lump sum contract =

		+	A lump sum contract (or [https://www.designingbuildings.co.uk/wiki/Stipulated_sum_contract stipulated sum contract]) is the [https://www.designingbuildings.co.uk/wiki/Traditional traditional] means of [https://www.designingbuildings.co.uk/wiki/Procuring procuring] [https://www.designingbuildings.co.uk/wiki/Construction construction], and still the most [https://www.designingbuildings.co.uk/wiki/Common common] [https://www.designingbuildings.co.uk/wiki/Form form] of [https://www.designingbuildings.co.uk/wiki/Construction_contracts construction contract]. Under a lump sum contract, a single ‘[https://www.designingbuildings.co.uk/wiki/Lump_sum lump sum]’ [https://www.designingbuildings.co.uk/wiki/Price price] for all the [https://www.designingbuildings.co.uk/wiki/Works works] is agreed before the [https://www.designingbuildings.co.uk/wiki/Works works] begin.

−	[[Category:DCN_Definition]]	+	It is defined in the [https://www.designingbuildings.co.uk/wiki/CIOB CIOB] [https://www.designingbuildings.co.uk/wiki/Code_of_estimating_practice Code of Estimating Practice] as, ‘a [https://www.designingbuildings.co.uk/wiki/Fixed_price_contract fixed price contract] where [https://www.designingbuildings.co.uk/wiki/Contractors contractors] undertake to be [https://www.designingbuildings.co.uk/wiki/Responsible responsible] for executing the [https://www.designingbuildings.co.uk/wiki/Complete complete] [https://www.designingbuildings.co.uk/wiki/Contract contract] [https://www.designingbuildings.co.uk/wiki/Works work] for a stated total sum of money.’
−	[[Category:DCN_Guidance]]	+
−	[[Category:Contracts_/_payment]]	+	This is generally appropriate where the [https://www.designingbuildings.co.uk/wiki/Project project] is well defined, when [https://www.designingbuildings.co.uk/wiki/Tenders tenders] are sought, and significant changes to requirements are unlikely. This means that the [https://www.designingbuildings.co.uk/wiki/Contractors contractor] is able to accurately [https://www.designingbuildings.co.uk/wiki/Price price] the [https://www.designingbuildings.co.uk/wiki/Works works] they are being asked to carry out.
−	[[Category:Cost_/_business_planning]]	+
−	[[Category:Procurement]]	+	Lump sum contracts might be less appropriate where speed is important, or where the nature of the [https://www.designingbuildings.co.uk/wiki/Works works] is not well defined. Other [https://www.designingbuildings.co.uk/wiki/Form forms] of [https://www.designingbuildings.co.uk/wiki/Contract contract] that might be more appropriate in such circumstances include [https://www.designingbuildings.co.uk/wiki/Measurement_contract measurement contracts] (used where the [https://www.designingbuildings.co.uk/wiki/Works works] can be described in reasonable [https://www.designingbuildings.co.uk/wiki/Details detail], but the amount cannot), [https://www.designingbuildings.co.uk/wiki/Cost_reimbursement_contracts cost reimbursement contracts] (used where the nature of the [https://www.designingbuildings.co.uk/wiki/Works works] cannot be properly defined at the outset, often used where an immediate start [https://www.designingbuildings.co.uk/wiki/On_site on site] is required), [https://www.designingbuildings.co.uk/wiki/Target_cost_contract target cost contracts], and so on (see [https://www.designingbuildings.co.uk/wiki/Procurement_routes Procurement route] for more [https://www.designingbuildings.co.uk/wiki/Information information]).
		+
		+	Lump sum contracts apportion more [https://www.designingbuildings.co.uk/wiki/Risk risk] to the [https://www.designingbuildings.co.uk/wiki/Contractors contractor] than some other [https://www.designingbuildings.co.uk/wiki/Form forms] of [https://www.designingbuildings.co.uk/wiki/Contract contract], as there are fewer mechanisms to allow them to vary their [https://www.designingbuildings.co.uk/wiki/Price price], and they give the [https://www.designingbuildings.co.uk/wiki/Clients client] some [https://www.designingbuildings.co.uk/wiki/Certainty certainty] about the likely [https://www.designingbuildings.co.uk/wiki/Cost cost] of the [https://www.designingbuildings.co.uk/wiki/Works works]. The [https://www.designingbuildings.co.uk/wiki/Tender_processes tender process] will tend to be slower than for other [https://www.designingbuildings.co.uk/wiki/Form forms] of [https://www.designingbuildings.co.uk/wiki/Contract contract] and preparing a [https://www.designingbuildings.co.uk/wiki/Tenders tender] may be more expensive for the [https://www.designingbuildings.co.uk/wiki/Contractors contractor].
		+
		+	However, a lump sum contract does not give all the [https://www.designingbuildings.co.uk/wiki/Project_risk project risk] to the [https://www.designingbuildings.co.uk/wiki/Contractors contractor], and it is not a [https://www.designingbuildings.co.uk/wiki/Fixed_price fixed price], or even a [https://www.designingbuildings.co.uk/wiki/Guaranteed_maximum_price guaranteed maximum price]. The [https://www.designingbuildings.co.uk/wiki/Price price] of a lump sum contract can change.
		+
		+	Mechanisms for varying the [https://www.designingbuildings.co.uk/wiki/Contract_sum contract sum] on a lump sum contract include:
		+
		+	* [https://www.designingbuildings.co.uk/wiki/Variation Variations]: These are changes in the nature of the [https://www.designingbuildings.co.uk/wiki/Works works]. Most [https://www.designingbuildings.co.uk/wiki/Contract contracts] will contain provision for the [https://www.designingbuildings.co.uk/wiki/Architects architect] or [https://www.designingbuildings.co.uk/wiki/Contract_administrator contract administrator] to [https://www.designingbuildings.co.uk/wiki/Issue issue] [https://www.designingbuildings.co.uk/wiki/Instruction instructions] to vary the [https://www.designingbuildings.co.uk/wiki/Design design], [https://www.designingbuildings.co.uk/wiki/Quantity quantities], [https://www.designingbuildings.co.uk/wiki/Quality quality], sequence or working [https://www.designingbuildings.co.uk/wiki/Condition conditions].
		+	* [https://www.designingbuildings.co.uk/wiki/Relevant_event Relevant events]: A [https://www.designingbuildings.co.uk/wiki/Relevant_event relevant event] may be caused by the [https://www.designingbuildings.co.uk/wiki/Clients client] (for example, [https://www.designingbuildings.co.uk/wiki/Failure failure] to [https://www.designingbuildings.co.uk/wiki/Supplies supply] [https://www.designingbuildings.co.uk/wiki/Goods goods] or [https://www.designingbuildings.co.uk/wiki/Instruction instructions]), or may be a [https://www.designingbuildings.co.uk/wiki/Neutral_event neutral event] (such as [https://www.designingbuildings.co.uk/wiki/Exceptionally_adverse_weather exceptionally adverse weather]) and may result in a [https://www.designingbuildings.co.uk/wiki/Claims claim] for [https://www.designingbuildings.co.uk/wiki/Loss_and_expense loss and expense] by the [https://www.designingbuildings.co.uk/wiki/Contractors contractor].
		+	* [https://www.designingbuildings.co.uk/wiki/Provisional_sum Provisional sums]: An allowance for a specific [https://www.designingbuildings.co.uk/wiki/Element element] of the [https://www.designingbuildings.co.uk/wiki/Works works] that is not defined in enough [https://www.designingbuildings.co.uk/wiki/Details detail] for [https://www.designingbuildings.co.uk/wiki/Tenderer tenderers] to [https://www.designingbuildings.co.uk/wiki/Price price].
		+	* [https://www.designingbuildings.co.uk/wiki/Fluctuation Fluctuations]: A mechanism for dealing with [https://www.designingbuildings.co.uk/wiki/Inflation inflation] on [https://www.designingbuildings.co.uk/wiki/Project projects] that may last for several years where the [https://www.designingbuildings.co.uk/wiki/Contractors contractor][https://www.designingbuildings.co.uk/wiki/Tenders tenders] based on current [https://www.designingbuildings.co.uk/wiki/Price prices] and then the [https://www.designingbuildings.co.uk/wiki/Contract contract] makes provisions for the [https://www.designingbuildings.co.uk/wiki/Contractors contractor] to be reimbursed for [https://www.designingbuildings.co.uk/wiki/Price price]changes over the [https://www.designingbuildings.co.uk/wiki/Duration duration] of the [https://www.designingbuildings.co.uk/wiki/Project project].
		+	* [https://www.designingbuildings.co.uk/wiki/Payments_to_nominated_sub-contractors Payments to nominated sub-contractors] or [https://www.designingbuildings.co.uk/wiki/Nominated_supplier nominated suppliers].
		+	* [https://www.designingbuildings.co.uk/wiki/Statutory_fees Statutory fees].
		+	* [https://www.designingbuildings.co.uk/wiki/Payment Payments] relating to the [https://www.designingbuildings.co.uk/wiki/Opening_up_works_for_inspection_and_testing opening up works for inspection and testing].
		+
		+	The better defined the [https://www.designingbuildings.co.uk/wiki/Works works] are when the [https://www.designingbuildings.co.uk/wiki/Contract contract] is agreed, the less likely it is that the [https://www.designingbuildings.co.uk/wiki/Contract_sum contract sum] will change.
		+
		+	It is important to recognise that a truly 'fixed' [https://www.designingbuildings.co.uk/wiki/Price price] [https://www.designingbuildings.co.uk/wiki/Contract contract] would not necessarily be in the interests of the [https://www.designingbuildings.co.uk/wiki/Clients client] as it would require that the [https://www.designingbuildings.co.uk/wiki/Contractors contractor] [https://www.designingbuildings.co.uk/wiki/Price price] [https://www.designingbuildings.co.uk/wiki/Risk risks] over which they may have no control, and which might not arise. It would also give very little [https://www.designingbuildings.co.uk/wiki/Scope scope] for the [https://www.designingbuildings.co.uk/wiki/Clients client] to alter their requirements.
		+
		+	Advantages of lump sum contracts:
		+
		+	* [https://www.designingbuildings.co.uk/wiki/Client%27s Client's] [https://www.designingbuildings.co.uk/wiki/Risk risk] is minimal.
		+	* Fewer [https://www.designingbuildings.co.uk/wiki/Variations variations].
		+	* The [https://www.designingbuildings.co.uk/wiki/Clients client] can arrange [https://www.designingbuildings.co.uk/wiki/Capital capital] according to the [https://www.designingbuildings.co.uk/wiki/Payment payment] [https://www.designingbuildings.co.uk/wiki/Plan plan].
		+	* [https://www.designingbuildings.co.uk/wiki/Contractors Contractor's] [https://www.designingbuildings.co.uk/wiki/Cash_flow cash flow] is predictable.
		+	* The [https://www.designingbuildings.co.uk/wiki/Tendering_process tendering process] is more [https://www.designingbuildings.co.uk/wiki/Transparent transparent] and [https://www.designingbuildings.co.uk/wiki/Impartial impartial].
		+
		+	Disadvantages of lump sum contracts:
		+
		+	* [https://www.designingbuildings.co.uk/wiki/Contractors Contractors] [https://www.designingbuildings.co.uk/wiki/Risk risk] is high (poor [https://www.designingbuildings.co.uk/wiki/Productivity productivity] and mismanagement can [https://www.designingbuildings.co.uk/wiki/Lead lead] the [https://www.designingbuildings.co.uk/wiki/Project project] into a [https://www.designingbuildings.co.uk/wiki/Loss loss]).
		+	* Poor [https://www.designingbuildings.co.uk/wiki/Details details] and specs in the [https://www.designingbuildings.co.uk/wiki/Design design] can [https://www.designingbuildings.co.uk/wiki/Lead lead] to [https://www.designingbuildings.co.uk/wiki/Project project] [https://www.designingbuildings.co.uk/wiki/Disputes disputes].
		+	* [https://www.designingbuildings.co.uk/wiki/Delay Delays] in the [https://www.designingbuildings.co.uk/wiki/Client%27s client's] [https://www.designingbuildings.co.uk/wiki/Financing financing] can [https://www.designingbuildings.co.uk/wiki/Delay delay] the [https://www.designingbuildings.co.uk/wiki/Project project].
		+	* The [https://www.designingbuildings.co.uk/wiki/Design design] should be [https://www.designingbuildings.co.uk/wiki/Complete complete] and available before the pre-[https://www.designingbuildings.co.uk/wiki/Contract contract] process.
		+	* [https://www.designingbuildings.co.uk/wiki/Procurement Procurement] times can be long.
		+
		+	See also: [https://www.designingbuildings.co.uk/wiki/Lump_sum_contract_-_pros_and_cons Lump sum contract - pros and cons].
		+
		+	= Related articles on [https://www.designingbuildings.co.uk/wiki/Designing Designing] [https://www.designingbuildings.co.uk/wiki/Building Buildings] =
		+
		+	* [https://www.designingbuildings.co.uk/wiki/Contract_sum Contract sum].
		+	* [https://www.designingbuildings.co.uk/wiki/Difference_between_lump_sum_and_measurement_contracts Difference between lump sum and measurement contracts].
		+	* [https://www.designingbuildings.co.uk/wiki/Evaluation_of_claims Evaluation of claims].
		+	* [https://www.designingbuildings.co.uk/wiki/Firm_price_contract Firm price contract].
		+	* [https://www.designingbuildings.co.uk/wiki/Fixed_price_contract Fixed price contract].
		+	* [https://www.designingbuildings.co.uk/wiki/Fluctuations Fluctuations].
		+	* [https://www.designingbuildings.co.uk/wiki/Force_account_work Force account work].
		+	* [https://www.designingbuildings.co.uk/wiki/Guaranteed_maximum_price Guaranteed maximum price]
		+	* [https://www.designingbuildings.co.uk/wiki/Loss_and_expense Loss and expense].
		+	* [https://www.designingbuildings.co.uk/wiki/Lump_sum_contract_-_pros_and_cons Lump sum contract - pros and cons].
		+	* [https://www.designingbuildings.co.uk/wiki/Measurement_contract Measurement contract].
		+	* [https://www.designingbuildings.co.uk/wiki/Nominated_sub-contractor Nominated sub-contractors].
		+	* [https://www.designingbuildings.co.uk/wiki/Procurement_routes Procurement route].
		+	* [https://www.designingbuildings.co.uk/wiki/Provisional_sums Provisional sums].
		+	* [https://www.designingbuildings.co.uk/wiki/Relevant_events Relevant events].
		+	* [https://www.designingbuildings.co.uk/wiki/Target_cost_contract Target cost contract].
		+	* [https://www.designingbuildings.co.uk/wiki/Variations Variations].
		+	* [https://www.designingbuildings.co.uk/wiki/Without_quantities Without quantities].
		+
		+	[[Category:DCN_Definition]] [[Category:DCN_Guidance]] [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]] [[Category:Procurement]]

94.5.190.212 at 19:56, 20 February 2022

2022-02-20T19:56:07Z

← Older revision		Revision as of 19:56, 20 February 2022
Line 1:		Line 1:
−	~~irements.~~

−	~~Advantages of lump sum contracts:~~

−	* Client's risk is minimal.	+	[[Category:DCN_Definition]]
−	* Fewer variations.	+	[[Category:DCN_Guidance]]
−	* The client can arrange capital according to the payment plan.	+	[[Category:Contracts_/_payment]]
−	* Contractor's cash flow is predictable.	+	[[Category:Cost_/_business_planning]]
−	* The tendering process is more transparent and impartial.	+	[[Category:Procurement]]
−		+
−	~~Disadvantages of lump sum contracts:~~	+
−		+
−	* Contractors risk is high (poor productivity and mismanagement can lead the project into a loss).	+
−	* Poor details and specs in the design can lead to project disputes.	+
−	* Delays in the client's financing can delay the project.	+
−	* The design should be complete and available before the pre-contract process.	+
−	* Procurement times can be long.	+
−		+
−	~~See also: Lump sum contract - pros and cons.~~	+
−		+
−	~~= Related articles on Designing Buildings =~~	+
−		+
−	* Contract sum.	+
−	* Difference between lump sum and measurement contracts.	+
−	* Evaluation of claims.	+
−	* Firm price contract.	+
−	* Fixed price contract.	+
−	* Fluctuations.	+
−	* Force account work.	+
−	* Guaranteed maximum price	+
−	* Loss and expense.	+
−	* Lump sum contract - pros and cons.	+
−	* Measurement contract.	+
−	* Nominated sub-contractors.	+
−	* Procurement route.	+
−	* Provisional sums.	+
−	* Relevant events.	+
−	* Target cost contract.	+
−	* Variations.	+
−	* Without quantities.	+
−		+
−	[[Category:DCN_Definition]] [[Category:DCN_Guidance]] [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]] [[Category:Procurement]]	+

94.5.190.212 at 19:55, 20 February 2022

2022-02-20T19:55:42Z

← Older revision		Revision as of 19:55, 20 February 2022
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−	A lump sum contract (or stipulated sum contract) is the traditional means of procuring construction, and still the most common form of construction contract. Under a lump sum contract, a single ‘lump sum’ price for all the works is agreed before the works begin.	+	irements.
−		+
−	It is defined in the CIOB Code of Estimating Practice as, ‘a fixed price contract where contractors undertake to be responsible for executing the complete contract work for a stated total sum of money.’	+
−		+
−	This is generally appropriate where the project is well defined, when tenders are sought, and significant changes to requirements are unlikely. This means that the contractor is able to accurately price the works they are being asked to carry out.	+
−		+
−	Lump sum contracts might be less appropriate where speed is important, or where the nature of the works is not well defined. Other forms of contract that might be more appropriate in such circumstances include measurement contracts (used where the works can be described in reasonable detail, but the amount cannot), cost reimbursement contracts (used where the nature of the works cannot be properly defined at the outset, often used where an immediate start on site is required), target cost contracts, and so on (see Procurement route for more information).	+
−		+
−	Lump sum contracts apportion more risk to the contractor than some other forms of contract, as there are fewer mechanisms to allow them to vary their price, and they give the client some certainty about the likely cost of the works. The tender process will tend to be slower than for other forms of contract and preparing a tender may be more expensive for the contractor.	+
−		+
−	~~However, a lump sum contract does not give all the project risk to the contractor, and it is not a fixed price, or even a guaranteed maximum price. The price of a lump sum contract can change.~~	+
−		+
−	~~Mechanisms for varying the contract sum on a lump sum contract include:~~	+
−		+
−	* Variations: These are changes in the nature of the works. Most contracts will contain provision for the architect or contract administrator to issue instructions to vary the design, quantities, quality, sequence or working conditions.	+
−	* Relevant events: A relevant event may be caused by the client (for example, failure to supply goods or instructions), or may be a neutral event (such as exceptionally adverse weather) and may result in a claim for loss and expense by the contractor.	+
−	* Provisional sums: An allowance for a specific element of the works that is not defined in enough detail for tenderers to price.	+
−	* Fluctuations: A mechanism for dealing with inflation on projects that may last for several years where the contractor tenders based on current prices and then the contract makes provisions for the contractor to be reimbursed for price changes over the duration of the project.	+
−	* Payments to nominated sub-contractors or nominated suppliers.	+
−	* Statutory fees.	+
−	* Payments relating to the opening up works for inspection and testing.	+
−		+
−	~~The better defined the works are when the contract is agreed, the less likely it is that the contract sum will change.~~	+
−		+
−	It is important to recognise that a truly 'fixed' price contract would not necessarily be in the interests of the client as it would require that the contractor price risks over which they may have no control, and which might not arise. It would also give very little scope for the client to alter their requirements.	+

	Advantages of lump sum contracts:		Advantages of lump sum contracts:

Editor at 19:26, 6 January 2022

2022-01-06T19:26:09Z

← Older revision		Revision as of 19:26, 6 January 2022
Line 43:		Line 43:
	See also: Lump sum contract - pros and cons.		See also: Lump sum contract - pros and cons.

−	= Related articles on Designing Buildings ~~Wiki~~ =	+	= Related articles on Designing Buildings =

	* Contract sum.		* Contract sum.
	* Difference between lump sum and measurement contracts.		* Difference between lump sum and measurement contracts.
		+	* Evaluation of claims.
	* Firm price contract.		* Firm price contract.
	* Fixed price contract.		* Fixed price contract.

Designing Buildings at 06:37, 27 August 2020

2020-08-27T06:37:54Z

← Older revision		Revision as of 06:37, 27 August 2020
Line 63:		Line 63:
	* Without quantities.		* Without quantities.

−	[[Category:~~Articles_needing_more_work~~]] [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]] [[Category:Procurement]]	+	[[Category:DCN_Definition]] [[Category:DCN_Guidance]] [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]] [[Category:Procurement]]

Designing Buildings at 06:17, 3 March 2020

2020-03-03T06:17:33Z

← Older revision		Revision as of 06:17, 3 March 2020
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	However, a lump sum contract does not give all the project risk to the contractor, and it is not a fixed price, or even a guaranteed maximum price. The price of a lump sum contract can change.		However, a lump sum contract does not give all the project risk to the contractor, and it is not a fixed price, or even a guaranteed maximum price. The price of a lump sum contract can change.
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	Mechanisms for varying the contract sum on a lump sum contract include:		Mechanisms for varying the contract sum on a lump sum contract include:
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	* Variations.		* Variations.
	* Without quantities.		* Without quantities.
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−	~~= References =~~
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−	* [https://quantitysurveyor.blog/2019/08/02/what-is-a-lump-sum-or-fixed-price-contracts https://quantitysurveyor.blog/2019/08/02/what-is-a-lump-sum-or-fixed-price-contracts]

	[[Category:Articles_needing_more_work]] [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]] [[Category:Procurement]]		[[Category:Articles_needing_more_work]] [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]] [[Category:Procurement]]