Common use of Lump Sum Fees Clause in Contracts

Lump Sum Fees. Lump sums, which may be broken down into components applicable to particular duties or stages of work, have the advantage that they are decided in advance by negotiation or tender and are then firm. It is not possible to provide guidance for Clients on likely lump sums, but comparison with fees calculated by the percentage method will give an indication of appropriate levels. Lump sums will inevitably incorporate an allowance for the additional risk involved in making such arrangements. As mentioned above, lump sum fees may be arrived at after going through the whole process of normal competitive bidding, and finally agreeing on a firm figure, that has taken into account all the cost elements of the project. This is suitable where the full extent of the services can be determined, and it enables the client to know his budgetary commitments in advance.