What type of contract typically includes a "fixed price" payment structure?

A lump-sum contract typically encompasses a "fixed price" payment structure, where the contractor agrees to complete the project for a specified total payment amount. This kind of contract provides clarity and predictability regarding costs, as both the client and the contractor know the total price up front. It allocates the risk of cost overruns to the contractor, incentivizing efficient work and careful management of project expenses.

In contrast, cost-plus contracts involve the contractor being reimbursed for all allowable expenses plus an additional amount for profit, which can vary greatly and does not provide a fixed price upfront. Time and materials contracts are based on the actual time spent on a project and the materials used, making costs variable and dependent on actual expenses. Unit price contracts set a price per unit of work, which can change depending on the quantity of work done, rather than providing a single fixed price for the entire project. Therefore, only the lump-sum contract aligns with having a "fixed price" structure.