The strength of an owner's negotiating position during a construction downturn can result in a contract that ultimately lowers a builder's profit. But even in hard times, there are ways contractors can protect themselves. Construction contracts are usually based on one of two principle types of pricing: • The lump-sum method, which allows the contractor to receive a specific amount for completion of the construction project. • The cost-plus method, which allows the contractor to receive actual costs for completing the project plus a specific fee. The Lump-Sum Method With the lump-sum method, the contractor examines the final plans and specifications for a project, estimates costs, adds profit, and submits a binding price for the entire project. The lump-sum method provides great security for
