When people think of entering into a contract with a Contractor they typically envision a Lump Sum Agreement. This type of agreement is the traditional form of project delivery. In this type of arrangement a Contractor is hired by an Owner to do a specific job, usually based upon plans previously prepared by a design professional such as an Architect. The Contractor enters into an agreement with the Owner to perform a specific Scope of Work as outlined in the plans for a single, "lump sum" price. The Contractor warrants that all of the costs and expenses for completing the job described by the plans are included in the Lump Sum Agreement. The Owner warrants that the plans are complete, buildable and that they define wanted is wanted from the Contractor.
Contractor Risks: Leaving some required costs out of bid calculations necessary to provide complete scope
Owner Risks: Plans do not describe all the elements required for a complete project scope
LUMP SUM AGREEMENT