As the name suggests a fixed price agreement is where the...

As the name suggests a fixed price agreement is where the builder agrees to perform building work for a fixed sum. This provides a degree of certainty to both parties, but during a period of escalating costs the builder is likely to include a risk premium into the contract sum for unexpected cost escalation during the construction period. Moreover in a fixed price contract there are usually a number of estimates or “provisional sums” for items such as siteworks which cannot be determined exactly at the time of signing a fixed price contract.