Engineering The contractors may submit high tender in lumpsum contract

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In a lump sum contract, contractors submit a fixed price for a project, but they often include a higher tender to account for potential uncertainties and risks. This practice allows them to protect against unforeseen conditions and errors in construction documents that could lead to increased costs. The discussion highlights that while the contractor's estimate aims to cover actual costs, the inclusion of a buffer is common to avoid financial loss. The term "high tender" refers to this strategy of overestimating to mitigate risks. Understanding this aspect is crucial for both contractors and clients in managing expectations and project budgets.
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what does it mean really?
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I don't understand what does this mean?

What does this mean? Please guide. I don't understand. In lump sum contract, once the contractor gives money it is all done isn't it. What does contractors submit high tender.
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It means the contractors may ask for more than it will actually cost.

Think about a lumpsum contract from the side of the contractor. You try and estimate as best as you can what to will cost, but you have to prepare for uncertainties and don't want to end up losing money because the job actually costed more than planned. The contractors will thus tend to include a buffer for uncertainties in their tender.
 
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“Unforeseen conditions” is one reason.
“Errors and omissions” in the construction documents and specifications is another reason.
 
DrClaude said:
It means the contractors may ask for more than it will actually cost.

Think about a lumpsum contract from the side of the contractor. You try and estimate as best as you can what to will cost, but you have to prepare for uncertainties and don't want to end up losing money because the job actually costed more than planned. The contractors will thus tend to include a buffer for uncertainties in their tender.
makes sense. thank you.
 
Lnewqban said:
“Unforeseen conditions” is one reason.
“Errors and omissions” in the construction documents and specifications is another reason.
Those are nothing to do with "the contractors may submit [a] high tender"; exposure to additional cost due to claims or variations are not addressed by that slide.
 
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