What is the main reason owners prefer fixed price contracts?

Owners prefer fixed price contracts primarily because of the clarity in project budgeting that these contracts provide. With a fixed price contract, the total price for the project is established upfront before work begins, which allows property owners to have a clear understanding of their overall financial commitment. This clarity helps in planning and allocating budgets effectively, making financial management simpler and more predictable.

In contrast to other contract types, fixed price contracts limit the risk of cost overruns for the owner, as they are not responsible for any expenses that exceed the agreed amount unless there are changes to the project scope. This predictability is especially valuable for owners managing tight budgets or those who need to secure financing for their projects.

While cost uncertainty, employee flexibility, and shorter project timelines are relevant considerations in contract selection, they do not provide the same level of financial assurance and predictability that fixed price contracts offer to owners. This is why clarity in budgeting is the primary reason for their preference.