A lump sum (or "fixed price") contract sets a single agreed price to deliver a defined scope of works. The client gets cost certainty; the contractor carries the risk that the job costs more than they priced. That trade only works if the scope is genuinely nailed down before anyone signs.
Where it shines: complete drawings and specifications, and a low chance of change. Where it bites: a fuzzy scope, where every gap turns into a variation — and every variation turns into an argument.
How to read one without getting burned
- The price is only as fixed as the scope. Freeze the drawings and spec before you sign. "We'll figure that bit out later" is where the money leaks.
- Read the provisional sums and PC items. That's where a "fixed" price quietly moves. Know what's a firm price and what's a placeholder.
- You own the quantities. Unlike a remeasured contract, a take-off error is yours to eat. Measure carefully and carry a sensible contingency.
- No paper, no pay. Get every variation instructed and priced in writing before the work goes in. Verbal instructions vanish at valuation.
- Protect cash flow. Stage/milestone payments beat waiting until the end. Agree the payment schedule up front, not on site.
Lump sum vs remeasured — the one-line version
On a lump sum, you carry the quantity risk against a fixed price. On a remeasured (measure-and-value) contract, the work is measured as built and priced against agreed rates, so the quantity risk sits more with the client. Neither is "better" — they just put the risk in different pockets. Know which pocket is yours before you price.
Fixed price ≠ fixed scope. Nail the scope first — everything else follows from that.