Effectiveness Of Different Contract Types In Mitigating Owner And Contractor Risks

Abstract

This Research Investigates How Four Principal Contract Types — Lump Sum, Item Rate, Cost-Plus, And EPC Turnkey — Distribute And Mitigate Risks Between Owners And Contractors Throughout The Entire Project Life Cycle, From Early Concept And Design Through Procurement, Construction, Commissioning, Handover, And The Defects Liability Period. The Study Compares Their Real-world Performance In Delivering Cost And Schedule Certainty For Owners While Preserving Profit Stability And Financial Health For Contractors, Analyses The Influence Of Varying Project Characteristics On Each Contract Type’s Effectiveness, And Identifies The Specific Conditions Under Which Traditional Models Break Down And When Collaborative Or Incentive-based Approaches Produce Markedly Superior Outcomes.

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