What is a fixed-price construction contract? What is a CCDC-2 type contract?
The fixed price contract, also known as a lump sum contract or CCDC-2, offers the customer a fixed and global price for the complete execution of a construction project. With this type of construction contract, the contractor commits to his client to carry out very specific work, for a fixed budget. The contractor therefore undertakes to provide its services according to precise and detailed plans or estimates, provided by the client, at a price that includes all the expenses planned for the realization of the work. This fixed-price embodiment includes labor, materials, supplier and subcontractor management, and other related services. However, unlike a construction management project, the fixed price contract does not include services in the pre-design phase, which includes consulting services and analyzes aimed at determining value-added elements as well as potential savings. Also, in this type of contract, the risks of price increase or decreases due to external circumstances are therefore greatly reduced for all parties involved. In the case of an increase in the price of materials, for example, the customer will not be charged for this increase. Note that the opposite is also true. Any savings made will be to the benefit of the contractor.
A fixed-price project is the perfect construction method for:
- An expert owner who is educated about construction law and who knows exactly what he wants
- A property owner who has already done their homework with architectural and engineering service providers and who already has in their possession all the plans and specifications ready to build
- A well-planned project, whose scope of work is well defined, which will require few modifications or additional work along the way
- A client with significant budgetary constraints, and who is looking above all for a fixed amount and good value for money
- A simple, non-complexe construction project with optimum execution conditions