Hard dollar, lump sum, fixed price they are all the same. Submit your tender, win the job and away we go, in theory the only additional dollars come from client approved variations. Some say this is the old-fashioned way, it is confrontational, leads to major contractual arguments and neither the builder nor the client wins.
The alternatives such as construction management, PPPs, negotiated D&C, etc have come to the fore, espousing so-called “win win” deals.
Interestingly, hard dollar gains popularity with clients as money becomes tight. they want certainty over budgets, especially as the IRR on projects reduces. Some builders tend to specialize in hard dollar projects, they are usually run with minimum overheads, tight margins and preliminaries cut to the bone. The project management style companies who are in the construction management mode struggle with hard dollar. Their management structure, staff experience means their overheads are high and they find the hard dollar market difficult to be competitive in and often get burnt thinking that they can adapt easily. At site level foreman on construction management projects issue site instructions with little regard to financial impact.
Subcontractor selection on construction management projects can be less rigorous than hard dollar. Their selection can be influenced by how easy they are to deal with rather than the best price.
Personally, I prefer hard dollar. i have spent most of my career delivering fixed price projects, with like-minded project teams and focussed subcontractors. project management teams who have concentrated on construction management, fee based on trade packages, need experience in the hard-nosed world of lump sum. They sink or swim.
PREMDALE CONSULTING 