A lump sum contract is the most suitable contract type for small projects with a clear and well-defined scope. This contract type establishes a fixed price for the work, reducing financial uncertainty and simplifying project execution.
Key advantages of lump sum contracts for small projects:
Fixed pricing ensures cost certainty.
Minimal administrative burden compared to cost-plus or reimbursable contracts.
Reduced disputes as the entire project is priced upfront.
Best for projects with a clear and unchanging scope to prevent change orders that could impact cost and schedule.
Option B (Subcontract): A subcontract is not a primary project contract type but rather a secondary agreement for specific tasks within a larger project.
Option C (Joint Venture): Used for large, complex projects where multiple entities collaborate.
Option D (Purchase Order): Used for procuring materials and equipment, not for managing an entire construction project.
Why Other Options Are Incorrect:According to ISO 10845 and DOE O 413.3B, lump sum contracts are best suited for straightforward, well-defined projects.
ISO 10845:2010 – Standard for construction procurement, including lump sum contracts.
NAVFAC Construction Contracting Guidelines – Defines lump sum contracts as the most efficient choice for small projects with clear scopes.
ANSI/ASQ Z1.13 – Guidelines for cost control and contract management in construction projects.
ASQ Construction Quality Management (CQM) ReferencesThus, the best answer is A: Lump sum.
