Which one of the following is the advantage of lump sum contract ?
- AIn case of unforeseen hazards during construction, the contractor is put to unlimited hardship
- BThere may not be any hazard which could not be visualized beforehand
- CIt becomes intricate to accommodate additions, alterations of design and specifications
- DLump sum contract works better in civil engineering construction than for mechanical and electrical installationsCorrect
Solution
Concept
Features of a lump sum contract
Step-by-step solution
1. In a lump sum contract the contractor quotes a fixed price for a fully defined job. 2. Unforeseen hazards and changes are disadvantages for the contractor and the owner (a and c). 3. Statement (d) says that it suits civil works better than M&E installations, which is presented as a merit.
Explanation
Lump sum contracts are suitable where drawings and specifications are complete, as in civil engineering construction.
Why the other options are wrong
(a) and (c) are disadvantages. (b) is not a general fact, since hazards cannot all be foreseen.
Shortcut
Lump sum: fixed price, complete design needed.
Correct answer: D) Lump sum contract works better in civil engineering construction than for mechanical and electrical installations