The contract in which the contractor needs to complete the work within a fixed sum and fixed time, irrespective of the qualities of different items, is:
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A.
Fixed contract
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B.
Lump sum contract
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C.
Item rate contract
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D.
Schedule contract
Correct Answer:
B. Lump sum contract
Explanation:
The correct answer is Lump sum contract.
A lump sum contract is a construction agreement where the contractor agrees to complete the entire project for a predetermined, fixed price. Under this arrangement, the total cost remains constant regardless of the actual quantities of materials or labor used, meaning the contractor assumes the risk of any cost overruns while the owner benefits from price certainty. This type of contract is typically used when the scope of work and project specifications are clearly defined before the start of construction, allowing for a straightforward billing process and minimizing administrative overhead related to tracking individual item rates.
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