CSLB C-33 Painting & DecoratingBusiness and Project ManagementEasy
A painting contractor is preparing a bid for a new project. The client has requested a contract that specifies a fixed price for the entire scope of work, regardless of the actual costs incurred by the contractor. Which type of contract is the client requesting?
- ATime and materials contract
- BCost-plus contract
- CLump-sum contract
- DUnit price contract
Show answer & explanationAnswer & explanation
Correct answer: C. Lump-sum contract
A lump-sum contract involves a single, fixed price for the entire project, transferring cost risk to the contractor. This contrasts with other contract types where the price can adjust based on actual costs or quantities.
Why the other options are wrong
- A. Time and materials contracts bill for actual hours and materials, not a fixed price.
- B. Cost-plus contracts reimburse actual costs plus a fee, not a fixed price.
- D. Unit price contracts bill based on quantities of specific work items, not a single fixed price for the whole project.
Lump-Sum Contract
A contract type where the contractor agrees to complete a project for a single, fixed price, regardless of the actual costs incurred.
- Fixed price for the entire project.
- Contractor bears the risk of cost overruns.
- Client knows the total cost upfront.
Memory trick: Fixed Price, Fixed Peace of Mind.