11/12/2019
What is lump sum contract?
Lump Sum Contract: When the Project or
Tender price is determined and quoted as a
total sum of money without individual ratings
to execute the whole of the works and
services according to the drawings and
specifications, it is called a Lump Sum
Contract. In such contracts:
It is difficult to administer changes and
amendments but experiences of similar
projects are used as a basis to this effect,
Works or services are checked based on the
specifications, the conditions of contract or
terms of reference and drawings if any for
acceptance and closing of accounts, and
Payments are agreed at different stages of
works or services.
A Lump Sum Contract is more suitable for
works of smaller in size and where the
contracting parties have prior experience of
similar projects. But it is not advisable for
projects with considerable uncertainties such
as; difficult sub surface situation, unusual
projects, maintenance projects, etc. A Lump
Sum Contract mainly includes Contract
Agreement, Conditions of Contract, Drawings
and Technical Specifications.