What type of contract specifies a fixed price for the entire project from start to finish?

A lump sum contract specifies a fixed price for the entire project, covering all aspects from start to finish. This type of contract is often preferred in construction and residential building because it provides clarity and certainty for both the builder and the client regarding the total cost of the project upfront. In a lump sum arrangement, the contractor agrees to complete the work for a set amount, allowing the owner to budget effectively without worrying about fluctuating costs.

The other types of contracts have their own structures and implications. A time and materials contract typically charges based on the time spent on the project and the materials used, which can lead to variable costs depending on the duration and resources consumed. A cost-plus contract allows the contractor to charge for actual costs incurred plus a fee, leading to even less predictability regarding the final price. A unit price contract focuses on pricing based on specific units or sections of work, which can also result in fluctuating totals depending on the work completed. The lump sum contract, however, stands out by providing a single, total price that encompasses the entire project scope.