Civil Engineering MCQAE Level Civil Engineering
In a lump sum contract, cost overruns due to unforeseen site conditions are borne by:
Construction ManagementContract ManagementMEDIUM
Choose the correct answer
A
The client — all risks lie with the owner
B
The contractor — who quoted a fixed price for the entire scope
C
Shared equally between client and contractor
D
Covered by the contingency fund maintained by the government
Correct Answer
B. The contractor — who quoted a fixed price for the entire scope
Why is this the answer?
In a lump sum/fixed-price contract, the contractor bears cost overrun risk as they have quoted one total price. This contrasts with item-rate contracts where payment adjusts to actual quantities. Contractors factor site risks into their lump sum quote.
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This MCQ belongs to AE Level Premium Test Series. Full tests include timed attempts, rank comparison and subject-wise analysis.