Fixing Construction’s Fixed-Price Conundrum

Fixing Construction’s Fixed-Price Conundrum

Fixed-price contracts, also known as lump sum, have become essential to owners moving forward in the tumultuous energy megaproject market and for public-sector entities struggling to stretch funds and quickly execute transportation and other infrastructure jobs. Experienced contractors have historically been able to manage fixed-price projects to some level of profit or recover from a loss—but aggressive bidding to build backlog, as well as acceptance of growing levels of project risk, have taken a toll. Market participants agree that fixed-price P3s are “not a silver bullet of procurement,” says Lee Clayton, Toronto-based vice president of contractor PCL. “There is a higher chance of success with greater standardization of P3s, but we still see clients reinvent the wheel and start from square one.”

https://www.enr.com/articles/48168-fixing-constructions-fixed-price-conundrum

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