Lump Sum Contract: In this type of contract, the contractor offers to do the whole work as shown in drawing and described by specifications for a total stipulated sum of money .
Merits:
i. The owner can decide whether to start or delay the project knowing the total lump sum price quoted by different contractors.
ii. The Contractor can earn more profit by in depth planning and effective management at site.
Demerits:
i. In this type of Contract unforeseen details of work are not specified in the contract document. The contractor gets opportunity to claim higher rates for extra items not included in the contract agreement.
ii. Before the contract is awarded the project has to be studied thoroughly and the complete contract document has to be prepared in advance.
