Tuesday, 9 January 2018

Lumpsum Contract

In this type of contract, the contractor offers to do the whole work as shown in drawings and described by specifications, for a total stipulated sum of money.

There are no individual rates quoted, thus it becomes difficult to make adjustments in the contract value if any changes are to be made in the work later on. The schedule of different items of work is not provided and the contractor has to complete the work as per drawings and specifications for the agreed lump sum amount.

Deposit of 10 % security money and other conditions of the contract are included in the contract agreement. Upon the completion of work, a fixed lumpsum amount is paid to the contractor. Detailed measurements of different items are required but the whole work is compared and checked with drawings and specifications before releasing the payment. In large projects, part payments are made to the contractor at different stages of work on money agreed terms. In case the contractor stops the work in
between he is not entitled for any further payment.

A lumpsum contract is more suitable for works for which contractors have prior construction experience. This experience enables the contractors to submit a more realistic bid. This type of contract is not suitable for difficult foundations, excavations of uncertain character, and projects susceptible to unpredictable hazards and variations.

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