A lump-sum (fixed-price) contract is most appropriate when:
Choose the correct answer
The scope of work is uncertain and likely to change frequently
The scope, drawings, and specifications are well-defined at the time of tendering, and the contractor takes the risk of cost overrun
The project involves complex unknowns best managed on cost-plus basis
Speed of construction is the only priority
Correct Answer
B. The scope, drawings, and specifications are well-defined at the time of tendering, and the contractor takes the risk of cost overrun
Why is this the answer?
Lump-sum contract: total price fixed at award; scope fully defined in tender documents. Contractor bears cost-overrun risk; employer bears scope-change risk (variations). Suitable for building construction with complete designs. Cost-plus (reimbursable) is used for uncertain scope (emergency, refurbishment). Unit-rate contract is used for earthwork, road work where quantities vary.
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