Lump sum
A single, fixed payment. In construction, it can also refer to a delivery method whereby a contractor enters into an agreement to complete work stipulated in a contract with another party for a predetermined, set price.
A lump sum contract sets a fixed price for the entire scope of work, providing certainty in budgeting and financial planning. While it limits cost overruns, it requires detailed project specifications and agreements to avoid disputes over scope changes or unforeseen conditions.
Used in a sentence
The contract was established as a lump sum agreement, fixing the total project cost.
Synonyms/variation
Fixed Price
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