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A lump sum contract in construction is one type of construction contract, sometimes referred to as stipulated-sum, where a single price is quoted for an entire project based on plans and specifications and covers the entire project and the owner knows exactly how much the work will cost in advance. [1] This type of contract requires a full and ...
A cost plus contract states that a client agrees to reimburse a construction company for building expenses such as labor, materials, and other costs, plus additional payment usually stated as a percentage of the contract's full price. This type of construction contract is an alternative to lump sum agreements.
The political assumption was that the low lump sum bid demonstrated a prudent use of public money, and open competitive bidding demonstrated a fair selection of contractors. Since competitive lump-sum bidding required complete construction drawings and specifications, Fast-track as used in Industry was unavailable to public owners.
Various abbreviations used for this type of contract are LSTK for lump sum turn key, EPIC for engineering, procurement, installation & commissioning and EPCC for engineering, procurement, construction and commissioning. [citation needed] Use of EPIC is common, e.g., by FIDIC and most Persian Gulf countries.
Construction bidding is the process of submitting a proposal (tender) to undertake, or manage the undertaking of a construction project. The process starts with a cost estimate from blueprints and material take offs. The tender is treated as an offer to do the work for a certain amount of money (firm price), or a certain amount of profit (cost ...
Time and materials (T&M) is a standard phrase in a contract for construction, product development or any other piece of work in which the employer agrees to pay the contractor based upon the time spent by the contractor's employees and subcontractors employees to perform the work, and for materials used in the construction (plus the contractor's mark up on the materials used), no matter how ...