Construction Forms - Lump Sum Contra

The most important of all Construction forms is the contract, or agreement. There are several types of contracts varying as to how payment is to be structured. One method of payment, or contract, is the “lump sum” agreement. In this type of contract, the contractor agrees to assume all risk involved in completing the project. Normally, a contract of this type will justify the contactor increasing the mark-ups of the job so as to compensate for any unforeseen issues which occur during project completion. In lump sum agreements, there are usually additional demands made upon the contractor.

Construction forms, dealing with a lump sum payment, often require the contractor to supply the client with additional information. Typically, the contractor is required to make written submissions of project management. The contractor may need to account for time management relative to project completion, as well as detailed information pertaining to specific and overall project management. Although the mark-up is expected to be greater on a lump-sum payment, any overages on materials or labor is the responsibility of the contractor. Obviously, this type of contract has the potential to significantly reduce the profit for the contractor. Although associated with large projects, these agreements can pertain to any size job.