Fixed-Price (Lump-Sum) Contract

A contract where the contractor agrees to a single total price for the defined scope, taking the risk on cost overruns.

Fixed-price is the simplest from the customer's standpoint — one number, one signature. The contractor takes the risk that materials, labor, or surprises won't blow the budget.

Works when scope is well-defined and the contractor has tight estimating discipline. Falls apart when scope is fuzzy and the contractor either eats the overruns or fights the customer for change orders on everything.

Related

• Time and Materials (T&M) — A billing structure where the customer pays the actual cost of labor and materials plus a markup or fixed margin.
• Cost-Plus Contract — A contract where the customer pays actual costs plus a fee — either a fixed dollar amount or a percentage of costs.
• Change Order — A written amendment to the original contract that adds, removes, or modifies scope of work — and the price.
• Compare contractor CRMs — FieldKrew against Jobber, Housecall Pro and ServiceTitan
• Retainage — A percentage of each progress payment (typically 5-10%) that the owner or GC withholds until the job is fully complete and accepted.
• Draw Schedule — A pre-agreed payment schedule for a construction project, tied to milestones or percentage of completion.