Which type of contract provides a fixed price for the project?

A fixed-price contract establishes a set amount that the contractor will be paid for the entire scope of work outlined in the contract, regardless of the actual costs incurred during the project. This type of contract helps ensure budget certainty for the project owner, as the total cost is agreed upon before the work begins. The contractor carries the risk of any cost overruns, incentivizing them to manage expenses efficiently.

In contrast, a cost-plus contract involves the project owner reimbursing the contractor for specific costs incurred, plus an additional fee, which can lead to unpredictability in total costs. The time and materials contract similarly does not fix the total project price, as costs can vary based on labor hours and materials used. Lastly, a unit price contract breaks the work into defined units, with pricing based on the number of units completed. This means the total cost can fluctuate depending on the quantities of units processed, rather than being fixed. Therefore, a fixed-price contract is distinct in its ability to provide a predetermined, unchanging price for the entirety of the project.