What is a key feature of a fixed-price construction contract?

A key feature of a fixed-price construction contract is that the contract price is established before the work begins. This means that the contractor and the client agree on a specific amount that will be paid for the completion of the project, regardless of the contractor's actual costs or the time required to complete the work. This arrangement provides clarity and predictability for both the contractor and the client. Once the price is set, the contractor must manage the project within that budget, incentivizing efficiency and cost control throughout the construction process.

This structure contrasts with other types of contracts, where payments are often based on time worked or where prices may fluctuate depending on actual expenses incurred. In fixed-price contracts, the financial burden of cost overruns typically rests with the contractor, emphasizing the importance of proper project planning and risk management.