Northstar awards a
contractor a fixed total price for constructing a warehouse. The contractor
bears the risk that actual labour and material costs exceed estimates, unless
the agreed scope is formally changed. Required: The contract is BEST classified as:

Question

Northstar awards a
contractor a fixed total price for constructing a warehouse. The contractor
bears the risk that actual labour and material costs exceed estimates, unless
the agreed scope is formally changed.  Required: The contract is BEST classified as:

Accepted Answer

Lump-sum,  because the total price is fixed for the defined scope.

Answer

Unit-price,  because payment depends on measured quantities.

Answer

Rental,  because
use of the completed warehouse occurs over time.

Answer

Cost-plus,  because actual costs determine the final amount.

Crowdly

Northstar awards a contractor a fixed total price for constructing a warehouse....

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