Public sector projects will almost always use which options?

• A. Stipulated lump sum
• B. Percentage of construction cost
• C. Both A and B
• D. All of the above

Answer: (C)

Public sector projects use contract approaches that fit different levels of scope definition and risk. A stipulated lump-sum (fixed-price) arrangement works well when the project scope is clear and well-defined, because it gives the owner price certainty and a straightforward bidding process. A contract based on a percentage of construction cost (cost-based fee) is used when the scope is less certain or there are many unknowns; it allows for flexibility and more accurate handling of costs as the project evolves, though it requires strong cost oversight. Because public projects may be procured under either scenario depending on the specifics, both types are commonly employed.