Fixed Price Contracts VS Dynamic Price Contracts
Learn about the two commonly used contract types in the construction and renovation industry.
What Is A Fixed Price Contract?
Fixed price contracts ensure the client and construction company agree to a set price for all projected services prior to the project commencing.
This generally includes, material costs, estimated work hours, completion dates, delivery and other project specific details.
The price agreed upon in the contract is not subject to change, part from jointly agreed upon flexibility and revisions devised in the contract terms. Changes such as additional works can be madero fixed price contracts through variations.
Benefits - Fixed Price Contract
Fixed price contracts can be paid in instalments with stage payments over the period of the contract and final payment on completion.
This form of contract defined the project specifically in all aspects, ensuring the renovation remains within budget, despite how much expense and time the company incurs.
Dynamic Price Contracts
Dynamic price contracts are the opposite to fixed price contracts, where the price of products, services and materials change over time, dependant on increased costs to the construction company and changing circumstances.
Disadvantages - Dynamic Pricing
Client’s do not have a fixed total project cost and are billed for unlimited hours spent on the project and expenses incurred. This can eventuate and lead to the project exceeding your budget, before the renovation is complete.