Contract Type

Question 1

Lump Sum (Fixed Price)

Answer 1

• the project equals fee
• simple/straight forward contract type
• fee is set on time spend that means you can lose or win profit
• light balance
• know the hours exactly - hours spend on the project

Question 2

Cost Plus Fee (Time and Material)

Answer 2

• preferred by Contractors
• owners do not prefer this since it can be an unknown as far as time goes
• the dollar amount by the number of hours equals the total fee
• makes sense when you need to show all your work to the client
• paperwork intensive
• good when it becomes hard to judge a fee
• positive outcome is when owner gets what they need

Question 3

Guaranteed Maximum Price (GMP)

Answer 3

• place when you have a point you not go past
• preferred by banks because it is not open ended for loans, payments
• not quite sure what it will cost exactly, but have an estimate what it will cost and will not go over it

Question 4

Hourly

Answer 4

• price is set per hour for the total number of hours spent
• simpler version of cost plus fee and less paper intensive