Stanaford Data Investment, Finance & Property Terms
 
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Fixed Price

A contract where the price is specified at the beginning and does not depend upon the contractor’s costs or amount of time required to complete the project (other than possible penalties for excessive delay).. This contract provides the client a guaranteed price but the price may be higher since the contractor assumes all risk – if the price appears too attractive it should be a red flag for the client – the contractor may have erred in estimating the costs or may be desperately seeking contracts at a loss. If materials and equipment are not defined clearly in the contract quality may be lower due to the contractor using cheaper items in order to reduce costs. Considering the wild swings in concrete and steel prices in recent years, for projects requiring multiple years to complete, many contractors will only sign fixed price contracts if they allow revision if the prices of major materials exceed a range established in the contract.

Term in Russian