Difference Between Lump Sum and Re-Measurement Contracts
The selection of right contract type is one of the most important decisions taken in a construction project. The contract type determines the method of paying the contractor, how risk shared and how to treat variations in works or quantities. The lump sum and Re-Measurement Contracts are the most common types of contracts in construction projects. What is lump sum contract? In lump sum contract, the Contractor consent to complete the works for a fixed total price. The price is agreed prior to commencement of the works, the price depends on drawings, specifications and the work scope. An example of a lump sum contract, is when the contract agrees to build a building of a value of 5M $, this amount will be considered as the contract price and the Contractor is expected to complete the works for the agreed contract price, there is expection that can affect the contract price such as variations or change instructions from the employer. What is the Re-Measuremen...