The Tactile Architect

GUARANTEED MAXIMUM COST CONTRACT
VS.
LUMPSUM CONTRACT
VS.
UNIT RATE CONTRACT

GUARANTEED MAXIMUM COAT OUTLAY

is preferred by clients whose construction projects are of such types where expenses can be estimated in advance with fair degree of accuracy. Their risk and uncertainty-bearing capacity are also limited. Hence, in order to protect themselves from this eventuality, they prefer to award contracts on this basis.

Advantages

1. It gives security to the client that he won’t be penalized for the contractor’s mistakes and carelessness in carrying out the project.

2. As there are little uncertainties regarding the costs and an almost accurate, crystal clear estimate of the costs – there are no unpleasant surprises.

3. As the project details are worked out very well in advance, the flow of work is quite smooth.

LUMPSUM CONTRACT

Lump Sum or Fixed Price method (per squaremeter estimate) is where both the parties – the contractor and the client – have agreed on a fixed price for the construction job on hand irrespective of the actual expenses involved.

Advantages

1. The owner's risk is reduced due to the price of the contract being fixed and variations are not as much like other contracts.

2. There are fewer change orders and they are reduced.

3. The bidding and contractor selection is less complicated.

UNIT RATE CONTRACT

Under unit rate or unit price contract, the contractor provides the owner with a specific price for one or more tasks or a partial “segment” or a “block” of the overall work that's required on the project. The owner then agrees to pay the contractor for the units that the contractor expends to complete the project.

Advantages

1. Fair basis for competition.

2. Changes in contract documents can be made easily by the owner.

3. Well-suited for repetitive and well-defined tasks.

MY RECOMMENDATION

Apply the information. Something you do by asking critical questions. Facing a decision, ask yourself:

"What concepts are at work?"
"What assumptions exist?"
"Is my interpretation of the information logically sound?"

Halimbawa sa isang text na nangangako sayo ng milyon, kailangan mong ikunsidera kung ano ang naghuhugis sa approach mo sa sitwasuon na yon? Iaasume mo ba na nagsasabi ng tama ang ang text sayo? Base sa ebidensya, logical ba na iassume na nanalo ka ng kahit anong pera?

This certainly won't eradicate difficult decisions from our lives. What will do though is it can help us increase the number of positive choices we make.