Ace the Utah Contractors Challenge 2025 - Business & Law Like a Pro!

In a lump sum estimate, the contractor agrees to perform a prescribed project for a single amount. This type of contract sets a fixed total price for the entire project, which means the contractor must complete all specified work for the agreed-upon sum. The benefit of a lump sum agreement is that it provides the owner with a clear understanding of project costs upfront, allowing for better budgeting and financial planning.

Other options reflect different aspects of contract agreements but do not accurately describe the nature of a lump sum contract. For example, agreeing to minimize material costs does not align with the fixed pricing structure of a lump sum estimate. Similarly, a requirement to complete a change order does not define the essence of a lump sum contract, which is to maintain a predetermined price unless both parties agree to modifications. Finally, suggesting that the contractor would complete the project for a cost determined at completion does not apply to a lump sum contract since the price is set at the beginning, eliminating uncertainty about final costs.