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Questions and Answers
In a Fixed Price or Lump Sum contract, what is the biggest risk carried by the contractor?
In a Fixed Price or Lump Sum contract, what is the biggest risk carried by the contractor?
- Competent contractors might not bid due to high-risk contracts
- Contractor handles most of the risk (correct)
- Changes and change orders can be very expensive
- Contractor aims to reduce cost to maximize profit
What is the advantage of a Cost Plus Fixed Percentage contract for the owner?
What is the advantage of a Cost Plus Fixed Percentage contract for the owner?
- Final price is known
- Easy to arrange funds
- Contractor aims to finish the project ASAP
- Maximum flexibility for owner with change orders (correct)
In what scenario is a Cost Plus Fixed Percentage contract typically used?
In what scenario is a Cost Plus Fixed Percentage contract typically used?
- When price can be determined in another way
- When final price is known
- For urgency (correct)
- When competent contractors might not bid due to high-risk contracts
What is the main disadvantage of a Fixed Price or Lump Sum contract?
What is the main disadvantage of a Fixed Price or Lump Sum contract?
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Under a Cost Plus Percentage contract, who bears the actual costs?
Under a Cost Plus Percentage contract, who bears the actual costs?
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Price charged to owner
Price charged to owner
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Contractor profit
Contractor profit
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Cost Plus Fixed %
Cost Plus Fixed %
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Cost Plus Fixed Fee
Cost Plus Fixed Fee
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Fixed Price /Lump Sum
Fixed Price /Lump Sum
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