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In this form of agreement, the contractor commits himself or herself to execute specified work for a stated "lump sum" or fixed amount. The lump sum might in some circumstances be adjustable on account of a rise or fall in the cost of labour and/or materials, or on account of any variation to the works at the request of the principal, or might include provisional allowances. But generally the contractor is not entitled to claim further money over the stated amount.
What else can I help you with?
What is the difference between lump sum contract and turnkey contract?
A lump sum contract is an agreement to make a one time payment for goods and services as specified by the purchaser in the agreement. A turnkey contract is an agreement to deliver a completed ready to use service or project without any specifications made by the purchaser.
What is a large lump of wood called?
A large lump of wood is commonly referred to as a "log." Logs are typically cut from trees and can be used for various purposes, including construction, furniture making, and as firewood. When a log is further processed into smaller pieces, it can become lumber, which is used in building and carpentry.
What are the Advantages and disadvantages of Lump Sum Contract?
the advantage is that you get to walk around with a lump and the diavantages is that some people might think you have cancer or a tumour.
What is lump sum project?
A lump sum project is a construction or service contract in which a single fixed price is agreed upon for the entire project, regardless of the actual costs incurred. This contract type transfers the risk of cost overruns to the contractor, who must manage expenses within the agreed budget. Lump sum agreements are often favored for their simplicity and clarity, as they provide clients with a clear understanding of total project costs upfront. However, they require careful planning and accurate estimation to avoid financial losses for the contractor.
Can you explain how personal contract purchase works?
Personal Contract Purchase (PCP) is a type of car finance agreement where you pay a deposit, followed by monthly payments for a fixed term. At the end of the term, you have the option to either return the car, trade it in for a new one, or pay a final lump sum to own the car outright.
What is a pre-nup?
Prenup is the term for a legal contract drawn up between two people before they marry that specifies what will happen if the marriage beaks up. Prenups usually deal with financial matters such as lump sum settlements or spousal maintenance payments.
What is a disadvantage of lump sum contract?
It's hard to say without more information but, in general, you may lose a lot more to taxes if you take a lump sum.
What is a turnkey contract?
In turn key contract, the contractor is entrusted to design, construct, commission & handover the project to the employer. The employer will make the lump-sum payment to the contractor at the different stages of work as per the agreement. This type of contract is useful when the work has to be completed at a very short period. The whole risk is borne by the contractor.
What are the advantages of making a lump sum payment when buying a house?
There are many advantages to making a lump sum payment when buying a house. A couple of the advantages are it lowers the design and contract administration costs.
What is lump sum contract?
That means the worker gets paid a fixed amount of money for finishing the job, regardless of how long it takes to get it done.
Do you have to make a lump sum IRA contribution each year?
No, you are not required to contribute in one lump-sum. You can pay into your IRA over a 15 month period whenever you like as long as it is paid according to your agreement before tax day on April 15th.
How many Types of contract in civil engineering?
Contract In law, a contract is a binding legal agreement that is enforceable in a court of law. That is to say, a contract is an exchange of promises for the breach of which the law will provide a remedy According to legal scholar Sir John William Salmond, a contract is "an agreement creating and defining the obligations between two or more parties". Construction contract Formal agreement for construction, alteration, or repair of buildings or structures (bridges, dams, facilities, roads, tanks, etc.). A construction contract is distinct from a contract to assemble, fabricate, or manufacture. While construction contracts serve as a means of pricing construction, they also structure the allocation of risk to the various parties involved. The owner has the sole power to decide what type of contract should be used for a specific facility to be constructed and to set forth the terms in a contractual agreement. It is important to understand the risks of the contractors associated with different types of construction contracts. Lump Sum Contract In a lump sum contract, the owner has essentially assigned all the risk to the contractor, who in turn can be expected to ask for a higher markup in order to take care of unforeseen contingencies. Beside the fixed lump sum price, other commitments are often made by the contractor in the form of submittals such as a specific schedule, the management reporting system or a quality control program. If the actual cost of the project is underestimated, the underestimated cost will reduce the contractor's profit by that amount. An overestimate has an opposite effect, but may reduce the chance of being a low bidder for the project. Unit Price Contract In a unit price contract, the risk of inaccurate estimation of uncertain quantities for some key tasks has been removed from the contractor. However, some contractors may submit an "unbalanced bid" when it discovers large discrepancies between its estimates and the owner's estimates of these quantities. Depending on the confidence of the contractor on its own estimates and its propensity on risk, a contractor can slightly raise the unit prices on the underestimated tasks while lowering the unit prices on other tasks. If the contractor is correct in its assessment, it can increase its profit substantially since the payment is made on the actual quantities of tasks; and if the reverse is true, it can lose on this basis. Furthermore, the owner may disqualify a contractor if the bid appears to be heavily unbalanced. To the extent that an underestimate or overestimate is caused by changes in the quantities of work, neither error will effect the contractor's profit beyond the markup in the unit prices. Cost Plus Fixed Percentage Contract For certain types of construction involving new technology or extremely pressing needs, the owner is sometimes forced to assume all risks of cost overruns. The contractor will receive the actual direct job cost plus a fixed percentage, and have little incentive to reduce job cost. Furthermore, if there are pressing needs to complete the project, overtime payments to workers are common and will further increase the job cost. Unless there are compelling reasons, such as the urgency in the construction of military installations, the owner should not use this type of contract. Cost Plus Fixed Fee Contract Under this type of contract, the contractor will receive the actual direct job cost plus a fixed fee, and will have some incentive to complete the job quickly since its fee is fixed regardless of the duration of the project. However, the owner still assumes the risks of direct job cost overrun while the contractor may risk the erosion of its profits if the project is dragged on beyond the expected time. Cost Plus Variable Percentage Contract For this type of contract, the contractor agrees to a penalty if the actual cost exceeds the estimated job cost, or a reward if the actual cost is below the estimated job cost. In return for taking the risk on its own estimate, the contractor is allowed a variable percentage of the direct job-cost for its fee. Furthermore, the project duration is usually specified and the contractor must abide by the deadline for completion. This type of contract allocates considerable risk for cost overruns to the owner, but also provides incentives to contractors to reduce costs as much as possible. Target Estimate Contract This is another form of contract which specifies a penalty or reward to a contractor, depending on whether the actual cost is greater than or less than the contractor's estimated direct job cost. Usually, the percentages of savings or overrun to be shared by the owner and the contractor are predetermined and the project duration is specified in the contract. Bonuses or penalties may be stipulated for different project completion dates. Guaranteed Maximum Cost Contract When the project scope is well defined, an owner may choose to ask the contractor to take all the risks, both in terms of actual project cost and project time. Any work change orders from the owner must be extremely minor if at all, since performance specifications are provided to the owner at the outset of construction. The owner and the contractor agree to a project cost guaranteed by the contractor as maximum. There may be or may not be additional provisions to share any savings if any in the contract. This type of contract is particularly suitable for turnkey operation.
