Oregon Construction Contractors (CCB) Practice Test

What is a special type of contract often used in construction?

1. Implied

2. Quasi

3. Lump-sum

4. Unilateral

The correct answer is: Lump-sum

A lump-sum contract is a special type of contract commonly used in construction projects. In this type of agreement, the contractor agrees to complete a project for a fixed total price, which simplifies budgeting and financial management for both the contractor and the client. This means that all costs associated with labor, materials, and overhead are included in the lump-sum figure, which provides clarity and reduces the risk of unexpected expenses during the project. This approach is particularly advantageous for clients who want a clear understanding of the budget from the beginning. The lump-sum format also incentivizes the contractor to complete the work efficiently and within budget, as any cost savings realized during the project enhance the contractor's profit margin. Other types of contracts, such as implied or unilateral, do not provide this level of financial certainty or clear pricing structure typically sought in construction projects. Quasi contracts relate more to obligations that arise from certain situations and are not typically used in the same way as traditional construction contracts. Therefore, the lump-sum contract stands out as a well-defined agreement commonly adopted in construction settings.