ABSTRACT
It is extremely difficult to properly and fully define the scope of work, technical quality, risk, and liability in any contract. This leads to a high probability that extras and claims will occur. Further, the inherent dynamics of any project on which scope and costs are estimated means that those estimates are always at risk as the realities of the work become known. Technical changes, material price variations, and construction conditions are rarely fixed and stable elements. In order to pass on some of these risks to the contractor, owners enter into lump-sum contracts, where many of the risks are included in the pricing agreements. In turn, contractors must properly estimate the cost of these risks and include them in their pricing proposal.
